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Finding the balance with mediation Everyone wins when nobody can afford to lose

a lupton fawcett periodical

Issue 2 Making them pay Getting the best deal out of business banking Creating a tax advantage for your business Can you point me towards the exit? Light at the end of the tunnel

Contents 3.

News in brief Product screening and Bribery Act updates


Making molehills out of mountains Has your business prepared for the worst?


New faces, solid foundations and fresh approaches An interview with Lupton Fawcett’s Managing Director


Finding the balance with mediation Everyone wins when nobody can afford to lose


Making them pay Controlling your finances at a time when ‘cash is king’


Your Will. Your Way The numerous benefits of making a Will

10. Creating a tax advantage for your business Underused tax advantages explained 11. Can you point me towards the exit? Discussing the future of corporate finance 12. Getting the best deal out of business banking Practical advice for business borrowers 13. Light at the end of the tunnel Is anyone threatening your right to natural light?

Welcome to the second edition of atticus. Building on the positive response to atticus’s first issue, this edition offers sound business advice and guidance: the kind that keeps you on your toes and ahead of the game in these tough financial times. We hope this advice will give you the law of advantage, helping you to strengthen, support and grow your business.

14. Once tasted loved forever An interview with Seabrook’s Chief Executive and Chairman, Ken Brook-Chrispin

Lupton Fawcett LLP Yorkshire House East Parade Leeds LS1 5BD Leeds: T: 0113 280 2000 F: 0113 245 6782 Lupton Fawcett LLP Velocity House 3 Solly Street Sheffield S1 4DE Sheffield: T: 0114 276 6607 F: 0114 276 6608

Lupton Fawcett atticus is printed on paper that uses only recycled fibre and wood from sustainably farmed sources as well as being carbon balanced.

Scan this code and it will direct you to the atticus web page, where you can download a PDF of the latest and previous editions or read them online. Standard text rates and data charges may apply.

The main aim of atticus is to inform and entertain, but we also hope to give you an insight into Lupton Fawcett, and some of our clients and contacts, along the way. We don’t intend this to be a technical publication, but we will keep you up-to-date with any changes and trends in the law that we think are interesting or relevant. Finally, we fully expect to evolve and develop this journal over time to better reflect the kinds of articles that you would like to read, so please don’t hesitate to let us know what you think and to make any suggestions for future editions. E-mail your thoughts to

Kevin Emsley Chairman

A Lupton Fawcett Periodical. Issue 2

News in brief Product Screening Can you spot the winners? Once a business has generated new product ideas, product screening is used as a method of spotting and dropping poor ideas as early as possible. As the costs of developing a product increase during each successive stage of development, the earlier a weak idea is identified, the better. Businesses need to perfect their product screening process in order to avoid making the following errors, and find the middle ground. Drop Error: taking too conservative an approach to product screening and abandoning product ideas that, in hindsight, could have been successful if developed.

Get to grips with the new Bribery Act

Go Error: taking an ambitious yet inexperienced approach to product screening by moving poor product ideas into the development and commercialisation stages.

The Act creates four new offences of bribery and represents a significant expansion of the current law.

Businesses will either develop their own screening process or commission another business to screen their product ideas for them, in order to determine which products to develop and bring to market.

In light of these changes, Lupton Fawcett offers a compliance package which provides essential training on the direct and indirect obligations imposed on UK businesses by the Act.

organisations, such as the NHS and associated foundation trusts, have made it clear that being able to demonstrate compliance will be essential for all their contractors and agents.

Critical in the new legislative regime is Risk Assessment. Our compliance package, which is split into Compliance Officer Training, Advanced Training, and Basic Training, provides online, step-by-step training for risk assessment and implementation. There is lots of practical guidance, with numerous examples and explanations of the new law.

This service avoids the need for expensive face-to-face training and takes the compliance burden off the shoulders of senior managers and directors. For further information, please contact either Tanya Forret on 0113 280 2195 or via e-mail or Andrew Davidson on 0113 280 2104 or

Consider the following points when screening any new products: • Can you clearly demonstrate your business is the inventor? • Is the product easy to copy or reproduce? • What certifications and qualifications are needed? • Does it raise any environmental issues, e.g. carbon footprint? • Is there potential to license the product or to start a joint venture? • Does it fit into your business’s portfolio and meet your overall business plans and objectives? • How easy or hard will the product be for you to develop and put to market? Rating each product against these criteria will at least give you some idea of its suitability to your business. As always, Lupton Fawcett are on hand to offer advice, so please contact John Sykes on 0113 280 2113 or if you would like to discuss this further.

For employees who require only general awareness of the new law and its potential impact on your business, and on them personally, our Basic Training course provides easily absorbed guidance. The training package provides a straightforward and proportionate way to ensure compliance. This is going to be increasingly important as major


Making molehills out of mountains Lupton Fawcett’s Jonathan Warner-Reed looks at why businesses large and small should give careful consideration to the steps they take to manage their reputations and considers how poor crisis management can have disastrous effects for any business or brand.

Jonathan Warner-Reed

Facing strong competition from Volkswagen in the small car market in the late 1970s, Ford took the decision to shorten the development stage of its new ‘Pinto’ model and rush it into production some eighteen months ahead of schedule. Pre-production, it was discovered the Pinto’s fuel system ruptured easily, even in low-speed rear-end crashes. Despite the discovery, Ford pressed on with production – and several hundred deaths and serious injuries were attributed to Pintos bursting into flames following low-speed, rear-end collisions. Ford’s action in continuing to produce the vehicle (and only taking action to modify its design after eight years of accidents) was explained by a cost-benefit analysis leaked into the public domain. Ford had calculated that the costs of recalling the vehicle, halting production and modifying the design would be $137m whilst insurance claims arising from vehicle damage, injuries and fatalities would amount to $49.5m. Ford’s apparently cynical approach caused outrage at the time. The company’s reputation was significantly threatened. However, today Ford’s reputation remains strong. Why did the Pinto scandal not signal the end of consumer confidence in Ford?


Ford was quick to highlight in public statements and court filings that the number of injuries and fatalities caused by rear-end collisions in their model was far lower than had been reported. The company cited National Highway and Traffic Safety Administration (NHTSA) statistics to support its position and advertised the fact that comparably-sized competitors’ models had higher fatality rates. In court on charges of negligent homicide, Ford’s lawyers argued that the cost-benefit analysis that had caused the media frenzy was not admissible in evidence against the company. This argument was upheld and Ford was acquitted. It paid damages in civil actions but, through a carefully planned and executed legal and PR strategy, avoided catastrophic injury to its brand. Any business can find itself in a crisis which, if not correctly managed, will have crippling, but avoidable, consequences. The Gulf of Mexico oil spill, for example, has already cost BP a huge amount of money. It has also cost CEO Tony Hayward his job. Referring to the disaster as ‘relatively tiny’ compared to the ‘very big ocean’ and taking a sailing holiday during the crisis are decisions which perhaps he will not recall with fondness as he looks back over his time in charge of the company. He may well reflect that, in this digital, 24-hour news age, it is extremely easy for reputations to be quickly and severely undermined, with little time for effective damage control. Headline-making news reporting, rival companies seeking to take commercial advantage, disgruntled ex-employees and unhappy customers can all contribute to the way a business is represented; whether reportage is fair or not, a relatively small voice can have a disproportionate impact. Lupton Fawcett was recently instructed by a company in connection with defamatory remarks that had been published about it online by a ‘protest organisation’. The remarks alleged unfair business practices, and that they were not true. A search revealed the protestors had made similar claims about other companies as well. Those other companies were competitors of our client. Our client’s instinct was to seek an injunction restraining the protestors from libelling it. However, following rapid research into the history and previous behaviour of the protest organisation, we concluded that adopting a positive PR campaign and holding back from a legal confrontation, and allowing the client’s competitors to engage in a very public court application with the protest organisation, would enable our client to drop off the protestors’ radar screen. The competitor was consequently subjected to further adverse publicity, which our client was able to avoid. Nevertheless, whilst PR is an important tool in reputation management, sometimes it is necessary to resort to legal process, and on those occasions we use it to its full extent to protect our clients. We were recently instructed to defend a well-known client’s name and business following serious allegations relating to his personal life. The allegations were entirely fabricated and deliberately targeted to damage his business. In that case, immediate legal action was taken to prevent the spread of the damaging comments. Within 48 hours a written apology and unequivocal retraction was signed, costs and substantial compensation were paid, and the client’s reputation was protected. In crisis situations, businesses and individuals need their advisors to have the ability to analyse scenarios quickly and to recommend and implement appropriate news management and damage limitation strategies. A key skill is to be able to judge whether to adopt a subtle approach or to take a hard line. Lupton Fawcett’s team of specialist Dispute Resolution lawyers is one of the most experienced in the North of England. Combining the skill and experience of our litigators with the knowledge of PR professionals who work alongside us, we are able to offer a formidable reputation management service to our clients.

A Lupton Fawcett Periodical. Issue 2


New faces, solid foundations and fresh approaches Richard Marshall is Lupton Fawcett’s Managing Director. He explains how Lupton Fawcett intends to serve their clients even more effectively in the coming years. In the first edition of atticus, I told you of our intention to become our region’s mid-market law firm of choice and described our plans to serve you in even more effective ways. These plans included developing a proposition that’s equal to the current mid-market offering, and providing commercial solutions that reflect a real understanding of your business and objectives, at a price that delivers real value. I am delighted that we have made progress with both the strength and depth of our services since then, supported by our ability to maintain value. Let me outline some of the changes we’ve made.

Fresh faces We have recently been joined by Russell Davidson, previously principal of Davidson Large LLP. Russell joins us as a Director and brings substantial expertise in the hotel and wider leisure industry, in particular in the property and development arena. Russell spent the early part of his career in The City with Linklaters & Paines before returning to Yorkshire to serve a national client base. He now recognises that he can provide for this client base even more effectively with support from our much broader range of services. We are delighted to welcome Russell and his clients and we’re certain that he’ll add huge value to our existing hotel and leisure industry sector offering.

Home sweet home There has been much debate in recent years, amongst both clients and lawyers, as to the office space that lawyers and other professionals might be expected to occupy. In light of this debate we have further strengthened our cost base going forward, and so our ability to deliver value, by our choice of office accommodation for our Leeds premises over the next decade. On one hand, most commercially-savvy clients do not wish to feel they are paying for unnecessarily palatial offices and the all too ubiquitous cavernous marbled reception. On the other hand, advisors need to attract high quality staff, and part of this process involves providing them with an inspiring and attractive working environment. This balance is a difficult one to strike and, unfortunately, many advisors got it badly wrong in the years leading up to the economic collapse of 2008. Unfortunately, one major firm was so misguided in their choice of office accommodation that when times became tough they were unable to service the cost of their building. Ultimately and very sadly, this led to the firm’s collapse.

Thinking to the future The existing lease of our premises at Yorkshire House in Leeds expires in 2012, and we have seriously considered the many

alternatives available to us through the plethora of new build and refurbished office space currently available in Leeds. Despite a number of landlords offering us extremely attractive alternative spaces, we have made the decision to remain in Yorkshire House. Two main factors contributed to this decision. Firstly, we recognise that moving operations would entail a large amount of disruption and distraction, at a time when we want to focus on the needs of our clients. Secondly, we negotiated an excellent deal with our landlord that secures significant improvements to the building and gives us substantial control over our property costs into the future, thus enabling us to remain cost effective. With maintaining value being one of our key objectives for the coming years, we are confident that we have reached the right decision for our clients and staff alike.

The Law of Advantage If we are to succeed in becoming the region’s mid-market law firm of choice, we understand that we must deliver a real brand that lives its values. The Lupton Fawcett brand is all about The Law of Advantage, which in turn is not just about what we do, but how we do it. It’s about our commercial approach, our unrivalled service level, our commitment to understanding our clients and, of course, quality. We have recently taken two major steps to improve our quality, the first of which was a full review leading to the production of a Quality Plan – a road map for delivering continual improvement. The second step involves the implementation of this plan, starting with the introduction of Quality Circles across our business. As you may be aware, Quality Circles are a management technique that was first developed in Japan’s car industry and subsequently widely adopted. This technique involves asking staff to engage with ways of improving all aspects of their work, and for those ideas to be tested, captured and cascaded through other parts of the organisation. This technique is not about major change, although of course that may happen, but about small incremental cumulative change which delivers substantial and continuing improvement. We have so far been delighted with the response from our staff, as we work hard to implement their ideas for enhanced client delivery wherever appropriate and possible. I hope that this brief overview demonstrates that we are serious about our objectives and that we are making progress. Most importantly, it shows that we operate in a commercial environment and face the same issues as any other business – thus increasing our understanding of the challenges you face and our ability to respond to them.

Richard Marshall

Finding the balance with mediation

two separate sites, only one of which was profitable. Through mediation, it became apparent that the tenant would happily and voluntarily surrender the non-profitable site if they could buy the profitable one, and so avoid onerous terms under a lease. As it was the non-profitable site that the Authority needed for its development, it liked this idea; it got the land it needed whilst removing the risk of a defaulting tenant along with all of the issues it wasn’t equipped to deal with. So a simple land repossession case, where one party would have lost and the other won, turned into a property transaction worth £1.2m. It was agreed in principle on the day and put into effect over the following two weeks.

The many benefits of mediation

Recent case law stipulates that a failure to mediate can lead to parties not being awarded costs, even if they are later successful at trial. Our Dispute Management expert, Paul Houghton, explains why mediation should be seen as a win-win process for all involved.

Mediation, where a third party mediator assists two or more parties to negotiate their own settlement in order to resolve a dispute, has been around in the UK for almost 30 years now, growing in popularity during the last decade. As financial restrictions on the Court service begin to bite, it’s clear that mediation is going to take on an even more central role in the litigation process, as it provides an opportunity to settle cases before they get to Court, thus saving Court resources. The major benefit of mediation is its ability to produce positive outcomes from negative situations that become unachievable once a case has gone to Court. This is because Courts are looking for a clear winner and loser in each case; they declare who wins and who loses in a dispute and decide who pays what to whom. Mediation allows both parties to settle their disputes in a far more creative way, often involving an element of give and take.

An example of successful mediation

Paul Houghton

As always, an example helps. We mediated a dispute between a tenant who ran a residential caravan park and the Local Authority that leased him the site. There had been a breach of the lease and the Local Authority wanted to remove the tenant and regain possession of the site. Sounds straightforward, but before the mediation both parties had been unable to discuss the dispute, and so neither party could see the whole picture. The Local Authority knew that if it repossessed the caravan park, it had no infrastructure to deal with the caravan owners who lived on the site for much of the year. These subtenants had legally enforceable rights to be there, and this would be a real problem to the Authority in the future. However, the Authority needed part of the site back to allow some significant development works to be carried out in the local town. The tenant knew they were in trouble with the lease but wanted to retain their livelihood, as the leased area was actually

The mediation process encourages early settlement, the benefits of which shouldn’t be taken lightly. This is particularly handy in cases where you’re likely to lose or the prospects of success are poor, as it will help you save on solicitors’ bills. Going to mediation and settling early in a case that you are likely to win (albeit at a discount) removes any risk early on; no case is riskfree in litigation and you also save your own legal costs and so derive a cash flow benefit. As the figures show that more than 80% of mediations result in settlement, the sooner the process is conducted, the greater the financial benefits. Most importantly, and usually ignored or forgotten in the heat of battle, mediation allows you to save all of the management time and effort that goes into running a piece of litigation. Your efforts are always better spent doing what you do well, which is running and growing your business, or getting on with your job and private life; not fighting over something that happened perhaps two or three years earlier and in which all of the major decisions are taken by lawyers, not you. If you choose litigation, remember that a lawyer can only make a really good job of your case if you put in the hard work of providing documents, comments on pleadings and witness statements, being available to take decisions over the phone at short notice and by feeding him or her the ammunition necessary to present the case at its best in Court.

Objective or subjective? As a mediator, and a litigator for over 25 years, I think the major advantage to mediation is that the mediation day gives all parties the opportunity to spend time focusing solely on the dispute and the risks and benefits to them as individuals or businesses. There is also an opportunity to try and obtain information both from the other side and from your own legal team. This allows for a thorough risk analysis to take place. What’s more, mediation allows decisions to be made objectively, removing the heat and drama of the courtroom. The question must be considered: do you achieve more by fighting than settling, and at what level should you settle? This opportunity did not exist before mediation arrived. Lawyers ran cases and occasionally the client received a phone call to say that some form of settlement was being offered or should be offered, and some discussion took place as to whether it was a good or bad one. The problem was that this usually happened well into the litigation process, after most of the costs had been incurred. Also, it didn’t really involve the client. Mediation changes that completely by making the process of deciding whether or not to settle one that the client controls – after detailed advice from their legal team – and with serious consideration of the commercial and personal drivers, which are present in all cases.

A Lupton Fawcett Periodical. Issue 2

Being honest, with yourself Another example helps illustrate this. We try to persuade individuals involved in disputes that mediation offers an opportunity to discuss the things that really matter to them, not just whether they are going to win or lose. We were involved in the litigation of an inheritance dispute that ran all day, and concentrated mostly on the legal merits and got quite heated. After it settled, the claimant was very relieved; when asked why, he said it was because his son was about to go to university and he wouldn’t have been able to afford both the lawyers’ legal fees and his son’s university fees. That was the single most important thing to the claimant and if he had expressed it at the outset, we would have made much quicker progress and saved still more fees. The process is also confidential and without prejudice. You can talk freely to the mediator, making sure he or she knows what is confidential and what isn’t. Knowing these things allows the mediator to tailor the process to allow the real drivers in a dispute to be dealt with, so that the end result can be achieved more quickly and effectively. Finally, mediation really can be a positive process; but even if the outcome is not completely ideal for both parties because of the necessity to compromise, it is a shared experience, and that is what achieves the result.

Mediation has the ability to produce positive, win-win outcomes from negative situations that become unachievable once a case has gone to Court.


Kevin Emsley

The phrase ‘cash is king’ has never been more relevant than in these times of austerity. Working capital lock-up – the costs of labour and/or materials that are paid for by the supplier, before they receive any payment from the customer – is one of the greatest challenges to running a business profitably. In many businesses, customers expect the work to be finished before they have to pay for your services. From the day you start working, you are incurring costs and therefore, for all intents and purposes, lending money to the client. It’s the business equivalent of being introduced to a stranger at a party who immediately asks you to lend them £1,000 without any ties. Even when the job has been completed and the invoice sent for payment, there will often be delays because everybody is trying to hang on to their cash for as long as possible. Ensuring that you receive your share without delay becomes paramount to business success. Of course for many businesses, from shops, restaurants and petrol stations to telephone companies, local authorities and gas and electricity suppliers, ‘working capital lock-up’ simply isn’t an issue. So what can you learn from these suppliers? How can you improve your cash flow? Here are five tips that we hope you will find helpful.

1. Clear instruction

From the day you start working, you are incurring costs and lending money to the client.

The first and most important thing is to make it clearly understood, right at the beginning of the job, what you are expecting to do for the customer, how much you expect to be paid, and when you expect to be paid. So before a pen is lifted or a ‘sod turned’, the customer has agreed to these three basic things. Make sure the customer knows what is included in the price and, importantly, what is excluded.

2. Maintain channels of communication Communicating with your customer throughout the period of work is essential, and so it’s the next most important thing on my list. You must explain straightaway if there are any deviations from the original scope of the work to be done for which you expect to be paid. It’s no good telling the customer that it didn’t work out as you had expected and that the invoice has gone up after you’ve finished the job. If this is a complete surprise, it will be the cause of potential dispute, which inevitably means delay. Give them a revised quote for the additional fees as soon as you possibly can, making them fully aware of the changes.

3. Explore payment routines There is no reason why customers should not pay the whole or part of the costs, either up front or during the delivery of the service. To some extent this depends on how long the job is. If it is the sale of a product, take an initial deposit before delivery. If you have to outlay expenses for the customer, such as procuring the services of a third party, then you should always ensure that payments for these services are received before or immediately after delivery.

Making them pay Lupton Fawcett Chairman and Director of Corporate Finance, Kevin Emsley, shares his five golden steps to help you avoid working capital lock-up, or as he likes to call it, “interest free, unsecured loans to strangers”.

If you are delivering and commissioning a product then split the payment into three phases; a deposit up front, a payment on delivery and the final payment when the equipment is fully commissioned. If it’s a service contract that will last for a period of time, then weekly or monthly payments will help cash flow. One big advantage of seeking payment before or during a job is that you will establish a payment history with the customer. If they don’t pay on time then putting them on stop is an extremely effective tool to ensure prompt payment. This tactic becomes unavailable once the job is over, however.

4. Prompt invoice = prompt payment Make sure that you send detailed accounts to the right address with a clear explanation of what it is for. Any errors or uncertainties are bound to delay the repayment of your customer’s “loan”. It’s important to make sure that the final account is submitted as soon as possible after completion of the job; if you have done a good job for the customer, then at that point they will be the happiest they are ever going to be about paying your account. Particularly in the case of work for consumers, it is sensible, if you are able, to have the invoice with you as you finish so you can hand it over there and then. If you lurk around a little you might even have the pleasure of going home with the payment.

5. Less is more than none Finally, when dealing with complaints or queries over the invoice or the service levels, if there is any genuine merit to the complaint, and remember that you may not be the best person to judge this, then it can save a lot of trouble, delay and hidden management cost to quickly agree a compromise. However, one tip here is to ensure that the reciprocation for any discount offered is immediate payment by the customer. This will help bring things to an end rather than let any wounds fester. And that wraps up our five simple tips; some of these may seem common sense but it always pays to have a plan to follow. We hope that you find them both interesting and helpful.

A Lupton Fawcett Periodical. Issue 2

Your Will Your Way


Not having a Will means running the risk of a family dispute following a death, and being vulnerable to all the upset and expense that goes with it. If a dispute does arise, the family could end up spending very considerable fees on legal advice that can easily amount to at least thirty to fifty times more than the cost of preparing a Will. A small insurance policy, the Will, saves cost, time and possible family break up.

Duncan Milwain, Head of the Trusts, Wills and Estates Department, discusses the numerous benefits of making a Will.

We all have those niggling lists of things that we know we simply must get round to doing, from contacting old school friends to clearing out the garage. And then of course, always right at the bottom of the list, there’s making a Will. Worryingly, only 30-40% of adults in the UK have a Will, and that’s not taking into account Wills that are well past their sell-by-date: those that don’t reflect changes in circumstances such as a divorce or remarriage, new grandchildren or that unexpected inheritance. To help them get off the bottom of life’s to-do pile, here’s why they are so important.

I don’t need a Will, do I? There are some standard assumptions about not having a Will. By far the most common is that if you are married, everything will automatically go to your surviving spouse. Well, it might, but then again it might not. You are leaving matters to chance rather than taking control of the situation and providing for your loved ones. For unmarried couples the position is even worse, when a very real possibility is that the surviving partner will get nothing. Another common excuse is, “I don’t really have anything to leave”. Sound familiar? Well, anyone with a home, even if it’s mortgaged, has a significant asset. Without a Will,

the family’s future security is at risk. In answer to both of these objections, a Will should be viewed as a structure around which other planning for the family can be built. It should seek to ensure that additional inheritance tax savings and long-term asset protection, including care issues, can be facilitated. It’s all about families planning together in a more joined-up way.

Professional advice? Costs too much! Another issue that is often raised about getting a Will is that it is too expensive. People are either put off altogether by how much they think it will cost, or are lured into buying something cheap and cheerful from the internet or a high street store. Although it may be hard to believe, after a house purchase and mortgage, a Will is probably the most valuable document most people put in place in terms of the value of the assets that it deals with. If the 1950s nuclear family was still society’s norm, people without a Will would probably get by under the statutory rules. Now, however, with co-habitation, second marriages, greater wealth and property ownership, the importance of a properly-thought-out Will is much more relevant. We’re all living longer, which raises issues of people’s capacity to make decisions. This can become critical and makes challenges to estates far more likely, which is why a £10.99 one-dimensional internet Will is unlikely to be robust or sophisticated enough.

I’m a busy person – I don’t have time Sadly, the increasingly electronic age we live in doesn’t appear to have provided us with more leisure time. Many of us find it a constant struggle to balance the pressures of work, home and family. It is understandable in this context that something like a Will, along with most of our financial affairs, gets kicked into the long grass. Add to this the fact that most of us expect, or at least hope, the need for a Will to be a long way off and finding even a few moments to sort it out seems impossible.

So what to do? To address the issues of cost and access we came up with “Your Will. Your Way”, which offers a professional and robust Will writing at your place of work. On-site meetings are held with employees over the course of a morning, usually taking about 20 minutes each. The Wills are produced on-site and arrangements made for these to be signed and completed in the afternoon. Each Will costs £100 including VAT, and in some cases employers recognise this as an opportunity to provide added-value employee benefit: by covering the cost themselves. The service requires us to see between 10-15 people in any one day and we’ve found that businesses employing about 40 people should have a sufficient take-up. It is not just workplaces that can benefit from this service – other associations of people, such as sports clubs, societies, and churches can also offer their members valuable “added-value” by participating in our programme. Bringing Wills into the workplace has proved an important way of ensuring people don’t end up in the two-thirds of the population whose affairs on death are substantially at risk of dispute.

Duncan Milwain

Creating a tax advantage for your business Claire Boyce, solicitor in our tax department, provides helpful advice on some frequently underused tax advantages that your business could benefit from.

Entrepreneurs’ Relief – advance planning can lead to significant savings Entrepreneurs’ Relief allows individuals and some trustees to claim relief on qualifying gains, made on the disposal of any of the following: • All or part of a business • The assets of a business after it has stopped trading • Shares in a company The relief is available for you as an individual if you are in business, for example as a sole trader or a partner in a trading business, or if you hold shares in your personal trading company. The relief is also available for some trustees, but not available for companies. It is very important that you get tax advice for Entrepreneurs’ Relief at an early stage, as advanced planning could save you up to £3.6 million. Such planning should include: • Properly detailing reasons for holding cash in a company • Using alternative structures to ensure the 5% condition is satisfied • Transferring shareholdings to family members who are officers or employees of the company at least 12 months before the sale of a business.

Using EMI options as tax-efficient staff incentives An EMI (Enterprise Management Incentive) scheme lets you grant tax advantaged share options to employees to help recruit and retain them within your company. EMI options are designed for smaller companies, combining flexibility with high tax efficiency, so we recommend that you consider this option if you think that your company might qualify. An EMI option scheme could benefit your company by providing key employees with a financial reward that’s determined by business success, and may also be taxed at a

much lower rate than a conventional bonus. Shared ownership can also be a powerful tool, as your staff can better understand how well the company is performing, and key people can be encouraged to stay with the company by way of committing to the scheme. As long as the relevant conditions are met, the grant of the EMI options are generally tax-free and there will be no income tax or national insurance contributions for you or your employee when the option is exercised. Capital gains tax is payable on any uplift in value. The rates of capital gains tax are lower than income tax rates and employees will be able to take advantage of their annual exemption, making the first £10,600 tax-free. EMI schemes can be structured in a number of different ways depending on the needs of your company, and can be either stand-alone schemes or can be put in place in conjunction with performance conditions or an employee benefit trust.

Transferring investment properties to an LLP to reduce tax on chargeable gains If your company holds an investment property, it may be possible to release any growth in value into personal hands. This will allow your company to avoid the deferred/double tax on chargeable gains, and any capital growth in the property can then be taxed to an individual’s CGT at 18% or 28%, rather than an effective rate of up to 53%.

Take advantage of the increased annual investment allowance The annual investment allowance for capital purchases is currently £100,000 per year, but this will reduce drastically from April 2012 to just £25,000. By bringing any spending on capital items forward, you can make the most of the current allowance before it vanishes.

R&D (Research and Development) Relief Following an increase in the rate to 200% of expenditure, which is set to increase again to 225% from April 2012, R&D is now a very attractive tax relief for SMEs. Furthermore, if your company is loss-making, R&D Relief can be surrendered for a tax credit of 14% giving you a much needed cash flow advantage. R&D is not just applicable to pure research-based enterprises and you may be surprised to learn that your company can claim R&D Relief.

Be green and save tax The Enhanced Capital Allowance (ECA) scheme is an important part of the Government’s programme to manage climate change. It provides businesses with enhanced tax relief in return for investment in equipment that meets published energy-saving criteria. You can benefit from enhanced capital allowances of 100% if your business purchases energy-saving plant, machinery, and technology, and if it uses low emission cars. If it is loss-making, these can be surrendered for a tax credit of 19%, providing your company with a much-needed cash flow advantage.

Consider applying for EIS status to attract more investment in your company EIS (Enterprise Investment Scheme) relief was introduced to encourage individuals to invest in small, higher-risk trading companies. Those who invest in qualifying companies can benefit from a range of attractive tax benefits such as: • 30% relief against income tax payable up to the annual investment limit of £500,000 (£1 million from April 2012) • Unlimited deferral of CGT (capital gains tax) liabilities incurred up to three years prior to and one year after the date of subscription for shares • Inheritance tax benefits after being held for two years • Capital losses can be relieved against income tax or capital gains • Capital profits on the sale of EIS shares are free from CGT if they are held for at least three years Should you wish to apply for EIS status, we will be able to fully inform you before you make these important decisions.

Make use of HMRC’s national insurance ‘holiday’ New businesses in certain areas that start up during the period from 22 June 2010 to 5 September 2013 may qualify for a deduction of up to £50,000 from the employer NICs that would normally be due.

Make tax work to your advantage by getting the best possible advice Tax law is complicated and business tax law doubly so. It is as simple as that. Reliefs and exemptions are built in to encourage businesses to thrive and grow. Talking to our tax lawyers will save you and your business money. We can help you plan future strategies – the timing could make a huge difference to the benefits you can derive from having expert tax advice on hand.

Claire Boyce

A Lupton Fawcett Periodical. Issue 2

The private equity and M & A markets seem to be showing signs of life. There is still a tension between investor confidence and uncertainty, but there are plenty of opportunities, and opportunity is what makes the private equity market thrive. The University of Nottingham Centre for Management Buy-Out Research recently reported that UK-led private equity buy-outs in the first half of 2011 amounted to £5.7 billion. That’s a big number in anyone’s book. And a lot of this activity has been played out in Yorkshire and Humberside, where Lupton Fawcett’s corporate team is very active.

Can you point me towards the exit? Andrew Lindsay, Director in the Corporate Finance Department of Lupton Fawcett and a Director of the Leeds, York & North Yorkshire Chamber of Commerce, discusses the future of corporate finance activity in today’s uncertain market.

We have just been instructed on the creation of a new private equity fund in Leeds, which is being backed by a number of prominent business people, each with an impressive track record. Elsewhere in the corporate team, we are talking to other venture capitalists who are coming out of hibernation and raising finance. This gives opportunities for existing business owners wishing to make an exit. As always, there is still a gap between vendor expectations and purchaser valuations. It can be a difficult tightrope to walk, bringing the competing demands of these parties together. But if deals are to happen, everyone has to be happy. When sellers want to sell, they have to be flexible and imaginative. But so do buyers. And the lawyers have to be creative, as well as understanding the law. VCs and private equity teams are spreading their wings by acting as bankers as well as investors. Indeed, they have to, as many banks seem to have less of an appetite to fulfil their traditional roles than was previously the case. How will the VC and private equity markets develop over the coming months? As ever, crystal ball gazing is an art rather than a science. And a very inexact one at that. The outlook remains uncertain, but that doesn’t mean parties won’t come to agreements and deals won’t happen. They will. Indeed, a good many equity investors will tell you they make more money during a disruptive, uncertain period than at any other time. Whatever the future holds for corporate finance activity, it’s essential that the lawyers supporting these transactions know what they are doing, and can complete deals on time, within budget and with skill and expertise. Fortunately, that’s where Lupton Fawcett is very strong.

Andrew Lindsay


Although some bankers are taking advantage of the current market to maximise income, more and more banks are returning to active business lending, giving greater choice to prospective borrowers and allowing them to start voting with their feet. Bankers need to remember the old adage that win-win negotiations make for long and happy relationships, or suffer the consequences further down the line. When negotiating with your business banker, you need to remember that you’re not negotiating with

the individual, you’re negotiating with the bank and its pricing policies. Entering the negotiations with a clear understanding of what is important to the bank, and of the parameters the individual banker is working to, will help you get a better deal.

Interest rate margin SME business lending is dictated by your security value and credit rating as it is viewed by the bank at that particular moment in time. This is calculated by banks using constantly shifting parameters that are difficult to

predict, as they vary bank by bank. This system allows banks to strategically price their lending according to risk. So, the higher the risk, the higher the pricing. In this environment, lending rates become a moving feast for the banks, which is why they are so keen to renegotiate margins on lending when they come up for review; not surprisingly, the new rates are usually higher to coincide with deteriorating finances. This also means that bankers usually have little power to vary the applicable rate, so it’s usually wiser to focus your negotiations onto the reduction of charges and ancillary fees.

Links, fees and charges

Get the best deal out of business banking These days, getting financial support from your bank can be far more important than the structure or pricing of the deal offered. Begbies Traynor Director, Mark Whitaker, takes a break from coordinating Begbies’ business development activity to provide some insight into the negotiation process.

Top tips for business borrowers Everything is negotiable – any aspect of deal structure can be linked into pricing Don’t haggle over 0.25 % of margin – unless the debt is significant, it’s not worth your time and effort Offer tangible security – if you believe in your business, then put your money where your mouth is and benefit from a reasonable improvement in margin Check for other charges – and seek reductions in these Talk about timings of fees – arrange these to suit your business cash flow Be reasonable – your banker wants the deal as much as you do Most importantly, remember that pricing isn’t everything – deal structure, covenants and conditions can be far more important.

When banks borrow from the markets to fund their business lending, they borrow at rates linked to LIBOR (London Interbank Borrowed Rate). If banks lend these funds out to clients linked to the Base Rate, they run the risk of the two becoming disparate, as was the case in 2007 and 2008. Linking your deal to LIBOR rather than the Base Rate might make it look as though your bank is attempting to make more money, when it is actually responsibly managing one of its risks. Fees are charges for work done, so there is no sense in a ‘standard’ 1% or 2% fee being levied – is there 10 times as much work for a banker in a £10m deal as there is for £1m? You should always ask your bank to provide clear justification for all fees, and ask for a clear picture of any potential discounts if fees are paid upon acceptance rather than drawdown. Alternatively, the banker may be quite happy to divert the up-front fee into a “success” or redemption fee. Other fees are usually the easiest ones to negotiate down, or even away, as they are often not subject to internal standard bank tariffs. These include security fees, early redemption penalties, success fees, covenant breach fees, and management, monitoring and site visit fees. Finally, any facility letters issued by the bank must be overviewed by your professional advisor, solicitor or accountant to ensure that any lending conditions, and there will be some, are fully understood before the facility letter is signed.

A Lupton Fawcett Periodical. Issue 2

There are few things that will make two neighbours behave quite as unreasonably as when one impinges on the other’s right of receiving natural light to their property. Developers may develop away with little thought for others, whilst those with the benefits of the right may seek to extort money without any thought for the benefit of the amenity proposed. This issue, which has recently played out dramatically on our doorstep, has been thrown into stark relief by the judgement in ‘Toronto Square versus Aspire’, where the judge ruled that part of a Leeds city centre office block should be pulled down after another property owner claimed it blocked out his light. This underlines the fact that the legal system can and will make an order to demolish the offending part of the building, or indeed the whole building, which blocks an established right to light. More importantly this will still be the case even if the complainant could and possibly should have acted earlier. The courts have made it clear that the risk remains with the developer. This risk has normally been one that the developer has been willing to take on board, even costing for sums that they may have to pay to resolve rights of light issues into their development programme. The problems associated with reinstating the building far exceed the burden of simply paying damages, and indeed are far more costly. This was the threat in Toronto Square, where the new storeys would have had to be removed to satisfy the neighbours. The judgement in this case also made it clear that there is no pressure on any claimant to make early protest in order to bring the matter to the attention of the developer or the courts. This further heightens the likelihood that even if the developer believes that the claimant’s case is weak, it will settle the dispute by paying the claimant a substantial sum to be rid of the problem. Any alteration of plans, both physically or on paper, will inevitably be both expensive and the cause of delay. There is planning legislation guidance included in BS8206-2 2008 (Lighting for Buildings – Code of Practice). However the planning community do not, in practice, consider their role to be one of protecting private property, and as such remain happy to leave it to the individuals and the courts to resolve the position. This leaves any developer at risk. In the past, developers were able to get a clear view of those who were serious about enforcing their rights by

The legal system can and will make an order to demolish the offending part of the building, or indeed the whole building, which blocks an established right to light.

Light at the end of the tunnel Lupton Fawcett’s Director of Commercial Property, David Bowden, discusses recent developments brought about by court rulings around infringements on the right of natural light, and their implications for both developers and businesses looking to expand. waiting to see who would have the courage to seek an interim injunction which, should it prove ineffectual, would expose the claimant to costs and, potentially, damages. As the law now does not insist on the claimant to a right to light acting with any haste, this financial protection is largely nullified – as any claimant will now find themselves in the happy position of threatening without actually showing their hand or taking any irreversible or costly action. It will be interesting to see what action the relevant local authority takes in relation to the new proposed development by Great Portland Estates at New Fetter Lane in The City. To add interest, the objector to the development is Michael O’Leary, better known as Chief Executive of Ryanair. There is some thought that, in this case, the relevant planning authority may use its powers under the Town & Country Planning Act to establish to developers that there is still a desire to have new development in the City of London – where space is at a premium and consequently rights of light are an ongoing issue. It seems clear with the ‘Toronto Square versus Aspire’ case that the balance of power has swung in the direction of the offended party who holds the right. The lesson here is that if you are a developer, you should consult with your legal advisors at the earliest opportunity to see where right to light objections are likely to come from, and begin early negotiation – potentially saving you time, money and large amounts of stress in the process.

David Bowden


Once tasted loved forever Ken Brook-Chrispin, Chief Executive and Chairman of Seabrook Crisps, discusses how and why he works with Lupton Fawcett.

You’ve been working with Lupton Fawcett for almost four years now. What was the original problem or challenge that you engaged them with and what business areas do they support you in today? Before we started working with Lupton Fawcett, our incumbent legal advisors had not treated Seabrook very well, and consequently we were seeking new advice. We were aware that Lupton Fawcett had acquired Fox Hayes and of the firm’s strong reputation for providing sound, professional legal guidance. Fortuitously I had a personal contact there, Kevin Emsley, who put me in touch with an expert team to provide us with legal assistance. Initially we were looking for advice on patents, so we were working with John Sykes, a Director at Lupton Fawcett and a specialist in

Intellectual Property and Competition Law. John and his team were extremely helpful, their advice was second to none, and they fixed us up with a local firm of patent agents who were able to support us with everything we needed. Because our initial engagement with Lupton Fawcett was such a positive experience, when we had some HR issues a few months later we turned to them for assistance. In this incidence we were assigned to Louise Connacher and the firm’s team of Employment Law specialists who provided us with equally sound advice. As a result, Seabrook have been working with Lupton Fawcett ever since.

Can you identify what impresses you most about Lupton Fawcett’s approach, and the main benefits of working with them? Although the real, tangible benefit is the solid advice we receive, perhaps more importantly we never felt that time was an issue. Sometimes when you visit a legal advisor it genuinely feels like you’re on a stopwatch – being charged for every single second and every piece of guidance. With Lupton Fawcett it doesn’t feel that way. It really helps to know that there is always someone available at the end of the line to speak to when you have a query or want some quick advice. Building on this, I was particularly impressed by their straight talking, no nonsense, and more importantly, honest approach. For example, if they think you have a chance of winning a case then they equip you with all the knowledge

A Lupton Fawcett Periodical. Issue 2

and advice you need, but equally if they don’t think you have a strong case then they tell you straight. Of course, this has benefits from both a financial and a timesaving perspective.

What else differentiates Lupton Fawcett from their competitors? There’s an old saying that a company is only as good as the last piece of advice they’ve given you. I have to say, all the advice that we’ve received so far from Lupton Fawcett has consistently been spot on. The main thing that differentiates the firm is their professional yet personal approach; you have people to talk to and rely on for the best possible legal guidance. Kevin in particular is a great mentor, and in fact everyone we’ve dealt with at Lupton Fawcett has proved to be worth his or her weight in gold. If this is the standard practice across the whole firm then it certainly gives them the competitive advantage. Based on my personal experience with the firm, I’d be happy to recommend them for commercial guidance.

Here in the UK, we tend to seek legal advice when we have business or legal problems, rather than avoiding problems in the first place. What’s your opinion of this approach, and have you benefited from ‘The Law of Advantage’ that Lupton Fawcett claim to put on your side? I’m a big believer that knowledge is power. If you don’t know your limitations before you enter into competition then you’re going to fail. I think it’s essential to equip yourself with

the right tools for the job, because if you don’t have the correct knowledge then you’ve lost before you’ve even started. What’s more, you lose respect. It’s also my firm belief that going into any negotiation cold is committing corporate suicide. For me, to go into any situation forewarned and forearmed is ‘The Law of Advantage’ – when you’ve got the law on your side, and you know exactly where you stand. I believe that Lupton Fawcett can give you that advantage.

Finally, why do you continue to use Lupton Fawcett? In summary, I value their straight talking approach, their business culture and their sound advice. And until any of that changes, they are the best people for me!

For me, to go into any situation forewarned and forearmed is ‘The Law of Advantage’ – when you’ve got the law on your side, and you know exactly where you stand. I believe that Lupton Fawcett can give you that advantage.


To some it’s about the company they attract To us it’s about the company we keep

Business is never as usual at Lupton Fawcett – it’s the result of our unique approach to client relationships. We are prepared to think in an untraditional way, and advise you as though we were advising our own business. It’s a culture that’s helped us form solid partnerships with businesses all over the country. We call it The Law of Advantage. 0113 280 2000 Sheffield: 0114 276 6607 Leeds:

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