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DECEMBER 2007 |
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This material will shortly be available at our web-site (www.russell-cooke.co.uk) together with an archive of past updates.
PROPERTY – STAMP DUTY LAND TAXCharities leasing property should be aware of the potential problems posed by stamp duty land tax (SDLT) in a situation where the charity assigns their lease to another party, which could effect the marketability of the lease and effect any premium obtained. SDLT is generally chargeable on the “Net Present Value” of the rents over the life of the lease. However, charities are normally exempt from SDLT. When a charity assigns their lease i.e. allows another party to take on the benefits and obligations of the lease for the remainder of the term, a liability to the tax can arise. If the party who is taking on the lease is not itself exempt from the tax, SDLT will then become payable. On an assignment the assignee (the new tenant) will be liable to pay SDLT calculated as if the assignment was a new lease. The SDLT due will be chargeable by reference to the remainder of the term of the lease and the rental payable for that period, and any consideration given by the new tenant to the charity for the assignment. In circumstances where SDLT has been paid on the initial grant of the lease the party who takes on the lease simply steps into the shoes of the other party, and no further tax is payable other than that due in respect of any consideration given for the assignment. Clearly the incidence of additional SDLT will have an effect on the marketability of the lease and the level of premium that the Charity may be able to secure for it. Finance Act 2003 Schedule 17A paragraph 11 (as amended) For further information, please contact: Please note that we are running a seminar on property risks which will highlight further potential issues relating to the ownership and management of property. This will take place on Wednesday 23 January 2008. For full details please see the link to our seminar programme in the Other Events section below
EMPLOYMENT – TRANSFER OF UNDERTAKINGSThe open-ended application of the Transfer of Undertakings (Protection of Employment) Regulations and the limited ability to vary the contractual terms of TUPEd staff continues to present problems to all organisations. A recent case does not provide reassurance that contractual variations agreed with staff following a TUPE transfer will be upheld. The case concerned an employee whose original retirement age was 60 but following a transfer signed a letter agreeing to be bound by the transferee’s terms of employment which included a retirement age of 65. He later took a claim against the transferee for dismissing him when he reached 60. The Court of Appeal held that in the case of an employee with acquired rights, any contractual variation agreed with the transferee would be regarded as an additional right rather than a waiver of the acquired right. The transferred employee could then choose between enforcing the transferred acquired right or the subsequently agreed right. Therefore the agreed variation of the retirement age did not deprive the employee of his original transferred right to retire at age 60. Power v Regent Security Systems Limited. CA. For further information, please contact:
PROPERTY REGISTRATIONPotential changes to the current triggers for the first registration of land in the UK at HM Land Registry (HMLR) will have implications for charities. Currently owners of land must register that land at HMLR on a purchase, a mortgage, or the grant of a lease for seven years or more. These events are called “triggers”. HMLR is proposing the introduction of additional triggers including in the case of unregistered land held by the individual trustees, the appointment of a new trustee by deed, by written instrument or court order. To make an application for first registration a simple form needs to be submitted to HMLR with evidence that the charity owns the property in respect of which the application is being made. It is normally necessary to make this application within two months of the date of the trigger event, failing which the owner will find it difficult to sell, mortgage or otherwise deal with the land until the registration is complete. Land Registration is being encouraged. Voluntary registration, before a trigger event, is carried out by HMLR at discounted fee levels. Registration has advantages for charities as it gives the landowner the benefit of statutorily endorsed title. Trustees will be able to ensure that their legal ownership is accurately recorded. We have frequent experience of charitable trusts coming to us for advice in connection with the sale or disposal of land where on checking title it is found to be held in the name of former or even deceased trustees. Making good such defects can be difficult, time consuming and expensive, requiring the co-operation of previous trustees or an order from the Charity Commission. HMLR is currently seeking views in connection with the introduction of these additional trigger events. Please contact us if you would like advice or assistance with the voluntary registration of unregistered land. For further information, please contact:
MERGERSThe Commission Register of Mergers Charities that merge or have merged no longer need to retain a ‘shell’ charity in order to protect any legacies left to the old charity. The Register of Mergers run by the Charity Commission will enable the gifts to the merger body to automatically pass to the successor charity. To benefit, the merger must be registered with the Charity Commission. They will maintain a Register which will show: 1. The names and registered numbers of the charities involved What does this mean? A charity that has merged or intends to merge and is protected by an entry on the Register, will retain all gifts and legacies received after the date of registration, which have been left to the preceding charity. For further information, please contact:
EVENTSThe Charity Team's seminar series has begun again. To see the seminar programme, please click on this link: http://www.russell-cooke.co.uk/downloads/Charity_seminar_prog_07_08.pdf. The Charity Team
This material does not give a full statement of the law. It is intended for guidance only, and is not a substitute for professional advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be accepted by Russell-Cooke. Copyright: Russell-Cooke, December 2007 To subscribe to this monthly legal update please visit http://www.russell-cooke.co.uk/serv_charities_intro.htm and fill in the online request form, or send an email including your name and email to, charitylegalupdates@russell-cooke.co.uk An archive of past updates can be found at http://www.russell-cooke.co.uk/serv_charities_updates.htm If you would like to reproduce some or all of our updates in your own publication, contact KATE SLATTERY on 020 8394 6458, kate.slattery@russell-cooke.co.uk
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