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In the UK the creative sector is worth an estimated £36bn per year according to a report published by the Institute of Directors.  It is hoped that some of these businesses will benefit from the new rules and new business opportunities will be encouraged by the new cultural relief corporation tax deduction.   From April 2013, certain high-end television productions[i], video game makers and animation producers will receive corporation tax deductions of up to 25% provided they can pass defined “cultural tests” as discussed below.   This is good news for the UK creative sector, as the UK’s pre-eminence in this area has been undermined recently by incentive schemes in other countries and incentives targeted in the UK at different sectors.   

Tax breaks for films have been long established in the UK.  In fact, the film tax relief was used as the basis for the television, video game and animation reliefs (although films can also qualify by meeting the requirements of one of the UKs bilateral treaties regarding co-productions or a European Convention).  Under the new tax legislation the rates of deduction from UK corporation tax vary according to the cost of the production.  Relief of 25% is available for productions costing over £20 million, but for works costing less than £20 million corporation tax relief is restricted to 20%.

The tax relief can increase the amount of expenditure that is allowable as a deduction for corporation tax purposes or, if the relevant company makes a loss, can be surrendered for a payable tax credit.  http://www.hmrc.gov.uk/news/creative-ind-txcrd.htm

Cultural Test

The cultural test sets out certain thresholds that these producers must meet in order to qualify for the tax breaks.

Each television programme, film, video game or animation project must qualify for 16 of a possible 31 points to pass the cultural test.

The points awarded are slightly different for each industry, but fall within four categories:

-          Cultural content (subject to certain restrictions, points are awarded if the production set in the UK or the lead characters British. If the production based on British subject matter and the dialogue is mainly British further points can be obtained)

-       Cultural contribution (generally, if the production represents or promotes British culture, heritage or creativity, points can be obtained in this category)

-          Cultural hubs (this awards points for categories of actual work undertaken in the UK)

-          Cultural practitioners (points are awarded depending  on the location of those making the production – key staff).

There were initially justified grumblings from UK interactive entertainment (UKIE), the trade body for the video game industry. Their understandable argument is that basing the cultural test on that for the film industry is not appropriate for the video game industry. Games do not necessarily have traditional narrative or involve characters that are from a recognisable species.  This was reflected in the final legislation, which awards points for video games and lead characters from “an undetermined location”.

It is expected that this will encourage outsourcing of aspects of games to the UK but it may also lead to an increase in British themes and characters in video games.  Angry Liver Birds anyone?

International productions

It may be possible to obtain the benefits of this tax relief even if a film is not set or made in the UK, provided that the 16 points are made up by other work undertake in the UK.  However, to benefit from the tax breaks a UK company would need to be incorporated.

The lawyers at Gannons have extensive commercial law experience and work with corporate clients looking to structure their business in the most tax efficient way.  Contact us if you would like to discuss this further http://www.gannons.co.uk/expertise/tax-law/corporate-tax/

Government’s ‘Green Deal’ to Increase Property Energy Efficiency

Back in August October of 2011, the government’s so-called Energy Act (2011) received the royal assent. After a full 12 months in incubation, the act is due to come into full of effect in October of this year, just a few just a few short days away. But what is the new Energy Act is all about?

The basic concepts are around changes to the provision of measures taken for energy efficiency in both homes and business properties. The Energy act is, in many respects, a representation of the UK government’s desire to make moves towards solving the apparent lack of investors who eager to put money into measures to save energy in both residential and business properties. As a result of this, many properties in the UK are achieving particularly poor ratings in terms of energy efficiency, a big problem in the modern world.

In the UK, energy efficiency ratings for properties are measured using an alphabetical system which runs from A through G. The plan is to prevent anybody from selling a property which falls into the last two bands, F and G. Many critics of this adjustment to property laws say that it’s a somewhat risky move as it could prove detrimental to UK residents who are thinking moving home. Because of this latter issued, the so-called ‘Green Deal’ comes into the spotlight. Read more »

With all the bad publicity about injury solicitors, injury claims, compensation culture and referral fees, it’s refreshing to see some obviously positive news. Lloyd Green solicitors, based in Essex, pride themselves on being different. They tell us that they are sick and tired of all the negativity about what they do. yes, they are injury lawyers, yes they are in business to make money like every other business, but no, they do not encourage claims, they do not like dealing with with insurers on referrals, and they do take their responsibility to the local and wider community seriously. Read more »

Safeway Inc is a Fortune 500 company. At its annual meeting recently the general counsel attempted to ‘joke’ about two of the most powerful women in Washington; Nancy Pelosi and Hillary Clinton. Unfortunately for the general counsel, particularly Robert Gordon, who is also chief governance officer, the joke has been branded sexist by many and was met with a lack of amusement from people at the annual meeting.

The joke can be found here: http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202554396609&Was_the_Safeway_General_Counsels_Big_Joke_Sexist. The joke is a reused one which was told during Bill Clinton’s presidency. The gist of it involves comparing Hillary Clinton and Nancy Pelosi’s value to that of two pigs. The president is carrying two pigs under his arms, who are both complimented by a secret service agent. When the president states that he ‘got one for Hillary and one for Nancy’, the agent responds ‘excellent trade sir’.

For those interested in hearing the joke as it was told, an audio recording of Robert Gordon telling the joke can be found here: http://www.youtube.com/watch?feature=player_embedded&v=MCWMrGUouoQ. Read more »

Can TV really provide us with all the Legal Knowledge we need?

A recent survey, the online YouGov survey, which was commissioned by QualitySolicitors in Liverpool, has shown some rather surprising results in the way in which the UK public glean their legal knowledge.

The survey shows that almost 50% of Great Britain’s public gain the majority of their legal knowledge from films, television series and dramas, the internet and media publications such as newspapers and magazines.

Of those living in the north of the country 14% said they gleaned what legal knowledge they had from films and television, a further 15% said they had gained their knowledge from university and schools, whilst 16% gained their legal knowledge from the internet.

A total of 43% of the public residing in this particular area gained their total knowledge of legal matters through the internet, newspapers and magazines and films and television. This figure is 4% below the national average for the rest of Great Britain.

Ranking at the very bottom were the legal experts themselves with just 7% claiming they used them as a source for their legal learnings.

The idea behind the survey was brought about by the first television broadcast of a criminal being sentenced in the UK. The decision to broadcast this somewhat controversial event prompted vice-chair of the Faculty of Advocates Criminal Bar Association, Prominent QC Brian McConnachie, to note that TV dramas appear to be where the general public get the majority of their legal information and so, QualitySolicitors decided to commission the survey to find out if this was actually the case.

The criminal sentencing television broadcast showed the sentencing of David Gilroy at the High Court in Edinburgh. Gilroy was found guilty of murdering 38 year old Suzanne Pilley, his colleague and former lover.

The survey brings to light just how far removed the general public are from the legal profession, with only 9% of the general public in the entire UK gaining their legal knowledge from the ones who know best, the legal professionals.

QualitySolicitors’ chief executive, Craig Holt, stated that, although it is unsure, as yet, as to whether the television broadcasting of court proceedings will change public opinion in the way they gather their legal information, with currently 47% relying on TV, films, the internet, newspapers and magazines, one thing that clearly does have to change is the general public’s accessibility to legitimate legal advice and information.

Mr. Holt also stated that, while legal dramas and television shows are very entertaining, they can lead to much confusion when it comes to real-life law in the UK.

Artistic licence enables the director to alter specific aspects of a court process scene to fit the script so what the public are seeing does not necessarily reflect true-to-life legal proceedings.

However, it is hoped that the recent changes made to the legal system will mean that the legal world is gradually becoming more accessible and easier to understand. The complete repealing of 817 outdated UK laws and the partial repealing of a further 50 laws has begun to clear the path somewhat and should cut down on much of the confusion surrounding our laws for both the general public and UK solicitors. Read more »

Lawyers who are involved in child adoption cases have been using Human Rights Act arguments, which have had the effect of delaying adoptions. Ofsted has been unable to provide any details on how these human rights arguments are being used, although it has been suggested that they are based around Article 8 of the European Convention on Human Rights, which offers the right to family and private life.

The reason that it is difficult to provide specific details on the type of human rights arguments which are used is that reasons for setbacks in court are only allowed to be looked at by inquiry agents who are state-approved. Independent observers (for example, newspapers) are banned from reporting cases.

Ironically, the use of these types of arguments means that children who are waiting to be adopted can sometimes spend an extra 14 months in care whilst their case is decided. Lawyers’ human rights arguments are therefore preventing children who are waiting to be adopted from being united with their adoptive family sooner, which could have adverse effects on the child.

These delays are an additional negativity surrounding adoption, which has also seen the figure for the last few years of children in the state system being adopted reach an all-time low. Although the government has attempted to fix this by removing the barriers which prevented couples adopting children who were a different ethnic background, it has yet to tackle the court delay caused by human rights arguments.

Current estimates state that around 65,000 children are living in children’s homes or with foster families which are constantly changing. Delays relating to children’s’ adoptions are responsible for the delay witnessed in about 4 out of every 10 adoption cases. Additionally, assessment reports (which are another cause of delay) are often repeated/duplicated, which not only results in delay but also in a lot of inconsistencies and inaccuracies.

The courts are therefore under pressure to reduce the delay witnessed in child adoption cases. Some of this pressure has been directed by children’s charities, as they are highlighting the existing vulnerability these children often possess, which can be further exacerbated by a long-drawn out court process. The whole aim of child adoption is to secure good, loving homes for vulnerable children. This aim is somewhat diminished if, because of delays during that process, the children involved are subjected to ever changing foster families and children’s homes whilst their cases are decided.

New arrangements have been put in place which could see most court decisions being reduced to just 6 months. However, these are not set to come into effect until next year, and so we are now witnessing a period where children are still suffering due to delay in their adoption cases, even though an attempt is on its way to attempt to resolve this issue. Pressure has therefore been placed on the government to act now, and not wait until a year’s time where new changes will be in effect anyway.

Local councils have also expressed their agreement with children’s charities, citing cumbersome red tape and legal paperwork for additional delays experienced in child adoption cases. As these different institutions have highlighted, if the delay in children’s adoption cases is not reduced, more prospective adoptions will be blighted by the negative effect that this delay could cause on children.

EU law forces Apple 2-year warranty

Technology giant Apple was fined 900,000 Euros (around £750,000) by the Italian Antitrust Authority last month for not offering enough protection to its customers. Apple offers a standard one year warranty with its products and according to the authority, it fails to inform of the customer’s legal right to a two-year warranty for technical support under the EU law. Apple invites its customers to purchase an additional warranty called Apple Care that extends the protection period for a further two years.

The fine

The penalties apply to three of Apple’s Italian divisions: Apple Italia, Apple Retail Italia and Apple Sales International. Apple was fined 400,000 Euros for misleading its customers by not recognising the length of the statutory guarantee as prescribed by the Italian consumer code and a further 500,000 Euros for offering the Apple Care protection that in part (for one year) overlaps with the free warranty. The company must also publish an extract from the authority’s ruling on Apple’s website and amend the Apple Care plan accordingly within 90 days to include details of the two-year warranty.

Similar claims are coming from the consumer groups in Germany, Spain and The Netherlands who also asked Apple to change its terms of warranty in their countries.

Apple’s reply

Apple is preparing to launch an appeal. On its website the company stated that it believes to be compliant with the Italian consumer law regulations and that it respects consumer’s rights. It also posted an explanation in the legal section of its website explaining that the EU consumer law gives warranty rights in addition to the one-year standard warranty from Apple and Apple Care plan. The statement goes further by summarising the differences between the warranty offered by the EU law and the one offered by Apple. The consumer law warranty offers protection for defects that were present on delivery as opposed to the Apple’s after customer takes delivery warranty. The Apple Care plan provides a warranty for three years from the date of purchase for Mac or Apple display and two years for Apple TV, iPad, iPhone or iPod and is available at an additional cost.

The implications

The fine imposed on Apple covers the alleged breach of European warranty laws in Italy only but there is nothing to stop consumers from other European countries to launch similar claims. Apple can argue that the Apple Care Protection Plan gives the customers more than the standard EU law warranty including telephone technical support and express replacement service. However, the company needs to make sure that it is transparent as to which features of the warranty are extra without misleading the customers. For Apple as a company the implications of the Italian Antitrust Authority’s fine are significant from the strategic point of view. Apple needs to make sure that the warranty rules within the EU are specifically tailored to the region and are not necessarily the same as the standard regulations for the US or other parts of the world where Apple’s products are sold.

Television cameras in courtrooms

Since 1925 filming in UK courts has been prohibited. The reporters and their cameras are allowed to be outside the court but not inside the courtroom. The debate about whether that should change has been live for many years. Those in favour claim that allowing filming in courts will help to deliver truly ‘open justice’ and more transparency of judicial proceedings and those against raise the issue of protecting the rights of victims, witnesses and defendants.

The current situation and proposals

Currently filming is prohibited under the 1925 Criminal Justice Act and the 1981 Contempt of Court Act. The exception is the Supreme Court, which is governed by its own legislation and which broadcasts its proceedings live. The argument here is that the highest court in the UK hears appeals of cases of great public importance.

The proposals from the Ministry of Justice and the Government are to introduce the use of cameras to broadcast the judges’ summing up and sentencing in the appeal courts and depending on the outcome expand to include the crown courts.

Arguments in favour

The justice secretary Ken Clarke claims that the use of cameras can improve transparency and public understanding of judicial proceedings. The biggest UK TV broadcasters claim that greater openness and faith that justice can be done would be facilitated by bringing cameras into courtrooms. Watching a trial live on TV can be educational and contribute to improving public knowledge on what happens in the courtroom at different stages of the proceedings. The question is whether the judicial process is not transparent enough with courts being open to the public? If members of the public are, in fact, really interested in observing legal proceedings, what deters them from coming to court and watching them live there as opposed to the broadcasted live version?

Arguments against

The director of public prosecutions Keir Starmer, though backing the idea, stated that it is important not to promote anything which might have an adverse effect on the statements and evidence given by victims and witnesses in court. The argument against could go even further: will cameras in courts not discourage some victims from reporting their cases out of apprehension , shame or fear of being recognised and watched on TV by their neighbours or colleagues?

The outcome

The discussion continues and it is suggested that it might be mentioned in the Queen’s speech in May. Whatever the result of the debate, it is of the upmost importance that safeguards are put in place to protect the privacy and wellbeing of the participants in court proceedings and only implement the cameras if it is considered fair, just and reasonable in the circumstances.

New EU Data Privacy Laws

The recent hacking of Sony’s Playstation Network and the increase in popularity of social networking sites has prompted the EU’s decision to seek to get tougher on data protection.

Some cynics may say this is another attempt to raise revenues by imposing possibly huge fines on big companies, but others will say that data and privacy are becoming a very big issue and that action and enforcement with teeth are absolutely essential.

In English law, we already have the Data protection Act and this, in theory already places a high burden on all businesses as regards data protection with potentially stringent enforcement. The problem lies in enforcement, since the resources needed to police this kind of legislation are simply immense.

One requirement of the proposed new EU rules is that every company with 250 employees or more would need to have a designated Data Protection Officers (DPO).

The DPOs will be given full reign of the company’s data to ensure that any possible occurrence of data risk for both clients and the company itself are brought to an absolute minimum and will monitor all data protection applications utilised within the company.

DPOs will report any findings to the company board but will be considered as independent and won’t take their instruction from the company’s chief executives or board.

One particularly interesting aspect of the proposed new role is that DPO’s would get special employment protection, serving a minimum employment term of two years and only dismissable on the grounds of performance issues.

Also within the revision is the introduction of ‘The right to be forgotten’. This new ruling will mean that companies will be expected to delete data immediately on the request of the user and will also be obligated to report any breaches of data within 24 hours of the breach if feasible or as soon as possible.

One of the most frightening aspects of the revision is the possible penalties. These penalties can be up to £1 million in smaller companies or up to 2% of the annual turnover in larger companies.

When we take a look at global companies such as Facebook who have an average annual turnover of $4.20 billion then a breach in the Data Protection Act could cost them somewhere in the region of $80 million or more.

The last update of the EU Data Privacy Directive took place in 1995 since which time the advancement in technology has resulted in a vast increase in digital communication, much of which involving personal data and transaction details.

Although the review was undertaken with how new media technologies such as Facebook use their data in mind, it is thought that these new rules will have considerable impact on virtually every technology company in the EU. There’s also a good possibility that companies will be seeing far more bureaucracy within their walls once these rules come in to play.

Solicitor owes bank 70 million euros

An Irish solicitor appears to have run up a staggering debt of 70 million euros, which, surprise surprise, he is not now in a position to pay it back. The reports on this story do not make it clear whether the loan was in any way assisted by the fact that the individual concerned, Brian O’Donnell, was a solicitor, and perhaps the bigger issue is that this is further evidence of the excesses of the last decade and frankly totally reckless lending.