Latest from Mishcon de Reya https://www.mishcon.com This RSS feed displays the very latest news, events, articles and briefings from the Mishcon de Reya Solicitors web site at www.mishcon.com en-gb Copyright 2024 Mishcon de Reya LLP. All rights reserved. www.mishcon.com Latest from Mishcon de Reya https://www.mishcon.com/images/rss/logo_mishcon_rssfeed.gif https://www.mishcon.com PilotSite RSS Generator feedback@mishcon.com (Mishcon De Reya) Tue, 19 Mar 2024 09:51:34 +0000 20 <![CDATA[Mishcon de Reya launches Hong Kong based business insights consultancy, MDRi]]> https://www.mishcon.com/news/mishcon-de-reya-launches-hong-kong-based-business-insights-consultancy-mdri https://www.mishcon.com/news/mishcon-de-reya-launches-hong-kong-based-business-insights-consultancy-mdri feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 09:32:00 GMT Mishcon de Reya has today announced the launch of MDRi, a new market insights and analytics business within the MDR Group, which provides strategic advisory services to businesses worldwide.  

MDRi specialises in collecting and analysing data about markets, industries, and consumer behaviour to help clients make informed decisions about their products, services and market strategies, and foster overall business growth. It has a particular focus on private sector clients across Asia in the financial services, automotive, real estate, and luxury retail, tourism and leisure sectors.  

Based in Hong Kong, with resources also in Singapore and London, MDRi is strategically positioned to serve high-value sectors in Asia, where economic growth and market opportunities are significant.  

The business will be led by CEO Simon Tye. Simon has more than 20 years' experience in market insights and analytics working with businesses and consumers across North America, the Asia-Pacific and Greater China. Supporting Simon is a team of experienced insight generation and data analytics specialists. 

MDRi offers a comprehensive suite of services designed to equip businesses with the knowledge and foresight needed to thrive. Its core offerings include: 

  • Market research solutions: market research studies to provide clients with a deep understanding of their target markets and untapped opportunities. 
  • Competitive analysis: competitive analysis, enabling businesses to gain critical insights into their industry landscape and achieve a competitive edge. 
  • Trend forecasting: predictive analytics and trend forecasting techniques to anticipate future market developments, shifts in customer preferences, industry dynamics and technological advancements. 

MDRi's strategic capabilities are intended to complement the existing services offered by the Mishcon de Reya Group. It will operate in close collaboration with Mishcon de Reya LLP, the other MDR Group companies as well as the Mishcon Academy, the firm's in-house place of learning and development. 

This holistic offering enhances Mishcon de Reya’s ability to meet the diverse needs of its clients, who will be able to access a wealth of data-driven insights, market expertise and innovative learning tools.  

Kevin Gold, Executive Chairman of Mishcon de Reya, commented: "The launch of MDRi marks another significant milestone for Mishcon de Reya in Asia, as we execute our ambitious 10-year growth strategy to build a world-class consultancy with law at its heart. MDRi presents an exciting opportunity for the MDR group to enhance our offerings and empower our clients through data-driven decision-making and a comprehensive understanding of their markets. The expertise and innovative methodologies of Simon and his team align perfectly with our vision of delivering the highest quality strategic advice to drive success and I have been impressed by the calibre of their work so far." 

Simon Tye, CEO of MDRi, commented: "At MDRi, our mission is to empower businesses with the insights they need to navigate the complexities of the current business landscape. With our team of experts and our advanced data analytics capabilities, we are confident of delivering strategic advice that drives success in our client base. I am also looking forward to collaborating with other areas of the firm. By leveraging our collective strengths and expertise, we can provide a robust suite of services tailored to fit the demands of our clients." 

About MDRi 

Based in Hong Kong and with operations in London and Singapore, MDRi is a leading provider of business insights, empowering organizations with data-driven advice to make informed decisions and drive growth.  

Through advanced analytics, industry expertise, and innovative methodologies, MDRi uncovers strategic opportunities, mitigates risks, and helps businesses stay ahead in a rapidly evolving marketplace. With a commitment to excellence and client-centricity, MDRi is revolutionizing the way organizations harness insights for success. 

For more information visit MDRi

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<![CDATA[Judge rules computer scientist is not Bitcoin inventor: Gareth Dickson for The FinTech Times]]> https://www.mishcon.com/news/judge-rules-computer-scientist-is-not-bitcoin-inventor-gareth-dickson-for-the-fintech-times https://www.mishcon.com/news/judge-rules-computer-scientist-is-not-bitcoin-inventor-gareth-dickson-for-the-fintech-times feedback@mishcon.com (Mishcon De Reya) Mon, 18 Mar 2024 10:19:00 GMT Gareth Dickson, a Partner at Mishcon de Reya, has shared his insights regarding the recent High Court decision which determined that the Australian computer scientist Craig Wright is not the creator of Bitcoin.

The true identity of Bitcoin's inventor, known by the pseudonym Satoshi Nakamoto, remains a mystery. Dr. Wright has been asserting that he is Nakamoto since 2016. However, Mr Justice Mellor dismissed these claims promptly after the legal proceedings, stating that the evidence against Wright's claim was "overwhelming".

Gareth commented: "The judge’s finding that the evidence against Dr Wright’s claim was ‘overwhelming’ is hugely significant.

“First and foremost, it means that Dr Wright cannot now assert this claim against third parties, whether for defamation or for passing off. Perhaps more importantly for Dr Wright personally, it suggests that there were serious problems with parts of the evidence put before the court, some of which have been alleged to have been forged. If the judge were to find that evidence had been forged, it would be a very serious matter indeed.

“Most importantly of all, the speed and certainty of this finding shows that the English courts are very well-suited to dealing with technically complex disputes involving emerging and developing technologies. The English courts have shown, again, that they can provide one of the best forums in the world for determining these sorts of cutting-edge disputes.”

Read in full.

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<![CDATA[Litigating the climate crisis: Helena O'Mahony for Humanitarian Practice Network]]> https://www.mishcon.com/news/litigating-the-climate-crisis-helena-omahony-for-humanitarian-practice-network https://www.mishcon.com/news/litigating-the-climate-crisis-helena-omahony-for-humanitarian-practice-network feedback@mishcon.com (Mishcon De Reya) Fri, 15 Mar 2024 16:00:00 GMT Helena O'Mahony, of Mishcon Purpose, has written a piece for Humanitarian Practice Network, examining the role of the international human rights system in addressing the climate crisis and highlighting the potential of litigation to enforce state accountability and drive climate action.

The article discusses the intersection of climate change with human rights and the significance of recent legal cases, such as the complaint by Torres Strait Islanders against the Australian Government.

Helena wrote: "The case of Daniel Billy et al. v Australia represents a turning point in international human rights litigation. It is the first time that an international tribunal has found a country has violated human rights law through inadequate climate policy. This landmark decision not only underscores the culpability of state inaction in the face of climate change but also sets a precedent for future cases that could shape the global response to this existential threat. As climate-related conflict and displacement worsen, international human rights law and its institutions will need to adapt and respond. The case of Daniel Billy represents an opportunity: the international human rights system has the capacity to create one of the most powerful enforcement mechanisms to drive government response to the climate crisis."

Read in full.

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<![CDATA[Reversal of recent changes to the financial promotions regime]]> https://www.mishcon.com/news/reversal-of-recent-changes-to-the-financial-promotions-regime https://www.mishcon.com/news/reversal-of-recent-changes-to-the-financial-promotions-regime feedback@mishcon.com (Mishcon De Reya) Fri, 15 Mar 2024 15:49:00 GMT As set out in our previous article, from 31 January 2024 HM Treasury implemented various changes to the financial promotions regime in the UK, which impact on companies planning capital raising as well as angel investors. In particular, it revised the criteria for the high net worth and self-certified sophisticated investor exemptions to bring them in line with inflation and current approaches to investing.

The Government recently announced, alongside the Spring Budget 2024, that it will now reverse some of these changes. This comes after various questions were raised about the unintended impact the prior changes would have on the tech and investment community, such as the potential exclusion of women and underrepresented groups from capital raising opportunities, as well as ecosystems outside London.  

In summary, these new changes to the criteria mean:

  • The threshold for the annual income requirement for high-net-worth individual investor has been lowered from £170,000 back to £100,000 and the net assets condition has been reduced from £430,000 or more back to £250,000 or more.
  • For self-certified sophisticated investors, the turnover requirement for a director's company has been reduced from £1,600,000 back to £1,000,000. Additionally, a provision has been re-inserted so that an individual can be considered a self-certified sophisticated investor if they have invested in an unlisted company at least twice in the two years preceding the date on which their investor statement has been completed and signed and provided they state how many such investments they have made in that time.

The amendments have been made pursuant to the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment and Transitional Provision) Order 2024 (SI 2024/301) (the "Order"), which comes into force on 27 March 2024. The Order amends the criteria to be eligible for the exemptions (as noted above), whilst still maintaining the updated format of the investor statements that were introduced as of 31 January 2024. The Order also provides that investor statements that comply with the previous order will remain valid until and including 30 January 2025.

For guidance on how theses reversals apply to fundraisings, including the updated investment statements, please do get in touch with us to discuss further.

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<![CDATA[The FCA's increasing focus on AML supervised firms]]> https://www.mishcon.com/news/the-fcas-increasing-focus-on-aml-supervised-firms https://www.mishcon.com/news/the-fcas-increasing-focus-on-aml-supervised-firms feedback@mishcon.com (Mishcon De Reya) Fri, 15 Mar 2024 12:46:00 GMT On 5 March 2024, the FCA issued a Dear CEO letter highlighting significant shortcomings in the anti-money laundering (AML) frameworks of Annex 1 firms. Annex 1 firms are those firms which are not authorised or regulated by the FCA but are nevertheless subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs) and are required to register with the FCA to enable the FCA to act as supervisor.These firms include commercial lenders, some types of financial traders, money brokers and providers of safe custody services.  Such firms are not subject to rules in the FCA handbook but must comply with requirements in the MLRs. 

Following a number of supervisory inspections, the FCA has reported that a number of these firms have "fallen short" of the MLRs, and expressed its readiness to employ a "range of tools" to tackle these failings ranging from "requiring third-party reviews to enforcement action".

Key issues from the March Letter

In the Dear CEO letter, the FCA identified four common weaknesses in Annex 1 firm's AML frameworks:

  1. Business models: The FCA noted discrepancies between the business activities firms reported at registration and those conducted during assessments. Rapidly expanding firms failed to scale their financial crime policies accordingly, exacerbated by insufficient resources allocated to financial crime teams.
  2. Risk assessments: The FCA found that Business Wide Risk Assessments (BWRA) were either of substandard quality or entirely missing, contravening the MLRs. Additionally, Customer Risk Assessments (CRAs) were not sufficiently tailored to individual clients, overlooking critical risk factors and due diligence levels.
  3. Due Diligence, ongoing monitoring, and policies and procedures: The Customer Due Diligence (CDD) policies and procedures were found to be vague, leading to uncertainty regarding the implementation of ongoing monitoring and the application of due diligence.
  4. Governance, management information, and training: There was a notable deficiency in resources for financial crime teams, coupled with inadequate oversight from senior management. The lack of role-specific and general training resulted in low levels of financial crime awareness among employees. Furthermore, there was minimal engagement from senior management in discussions about financial crime risks and policies.

Evaluation of the issues

In response to the Dear CEO letter, the FCA expects Annex 1 firms to conduct a thorough gap analysis addressing each identified weakness within six months of receiving the letter. Firms are urged to take prompt and decisive action to address these gaps. The FCA has made it clear that it is likely to inquire about the progress made in future interactions with the firms. 

Comment

The Dear CEO letter is a culmination of an increased FCA focus on AML controls in Annex 1 Firms.  In September 2022, following lobbying by the FCA, the MLRs were subject to an amendment regulation which provided the FCA with new powers against Annex 1 firms: to issue information requirement notices, appoint skilled persons and to impose directions (for example preventing the onboarding of high risk customers).

When the FCA is provided with a new power, it explores ways to use it. Accordingly, during 2023 the FCA embarked on a programme of inspections of Annex 1 firms and has used its new powers to impose requirements on some of those firms.

We expect this focus to continue, particularly in the latter part of 2024 when the FCA will be keen to test whether firms have undertaken the gap analysis expected of them.

Our recent experience is that the FCA is less likely to commence formal enforcement proceedings against non-compliant firms than perhaps in the past. However, the FCA is increasingly using intrusive supervisory powers. In many cases the effect can be similar to enforcement and have a significant financial impact on firms - particularly where the FCA places restrictions on accepting new business or requires firms to meet the costs of, and deal with the disruption, involved in skilled person reviews.

It is therefore imperative that firms follow FCA guidance in the Dear CEO letter by undertaking a gap review or by initiating an independent regulatory audit under regulation 21(1)(c) of the MLRs.  Our experience of undertaking a gap analysis with clients is that depending on the degree of compliance, implementing remediation can take a number of months. To be ready for when the FCA calls, firms should not delay before initiating their review.

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<![CDATA[International expansion through Franchising: are you thinking about growing internationally?]]> https://www.mishcon.com/news/events/current/international-expansion-through-franchising-are-you-thinking-about-growing-internationally-2 https://www.mishcon.com/news/events/current/international-expansion-through-franchising-are-you-thinking-about-growing-internationally-2 feedback@mishcon.com (Mishcon De Reya) Tue, 16 Apr 2024 09:00:00 GMT Mishcon de Reya's Retail Group invites you to an interactive roundtable breakfast on international expansion through franchising. 

International expansion enables continued growth especially when local markets are saturated or competitive. Franchising often offers a less risky, less expensive and simpler option than setting up new operations overseas, as businesses can benefit from using other people's capital, knowledge and experience of local markets.

Lewis Cohen and Olivia Fulton are recognised experts in international franchising and will lead the roundtable discussions, covering:

  • Actions to take now to ensure that you are able to grow internationally when the time is right
  • Common mistakes and pitfalls and the steps you can take to avoid them
  • Alternative methods and structures for growing internationally
  • Major issues in some markets that you cannot afford to ignore
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Events
<![CDATA[UPC update: First substantive decision from the Court of Appeal and news on Milan]]> https://www.mishcon.com/news/upc-update-first-substantive-decision-from-the-court-of-appeal-and-news-on-milan https://www.mishcon.com/news/upc-update-first-substantive-decision-from-the-court-of-appeal-and-news-on-milan feedback@mishcon.com (Mishcon De Reya) Fri, 15 Mar 2024 10:07:00 GMT March 2024

In this month's update, we report on the first substantive decision of the UPC's Court of Appeal in which it overturned the grant of a preliminary injunction. We also report on the latest figures from the UPC, the signing of the Headquarters Agreement for Italy, and what has been widely criticised as a disappointing decision in the ongoing debate over transparency of pleadings, in advance of the substantive resolution of this issue by the Court of Appeal.

Number (and locations) of cases

On 1 March 2024, the UPC issued its second caseload update of the year detailing the number of cases since it opened its doors on 1 June 2023. There have now been 274 cases brought before the UPC, including 96 infringement actions and 24 revocation actions, as well as 129 counterclaims for revocation. This is a considerable increase in the number of cases since the last report at the end of January 2024, when the UPC reported a total of 217 cases. We expect the number of cases to continue to rise as confidence in the system appears to grow.

The Munich Local Division continues to lead the way on infringement actions, with the Paris Central Division still receiving the bulk of the revocation actions. Since our last report, the Copenhagen Local Division has received its first case.

Infringement actions and applications for provisional measures

Division

Infringement actions

Provisional measures

Munich

36

11

Düsseldorf

20

3

Mannheim

11

 

Paris

9

 

Hamburg

5

1

Nordic Baltic Regional Division

5

 

Milan

3

 

The Hague

3

 

Brussels

1

 

Helsinki

1

1

Copenhagen

1

 

Lisbon

 

 

Ljubljana

 

 

Vienna

1

1

 

Revocation actions

Division

Revocation action

Paris

20

Munich

4

Milan

 

 

Since our February report, the language of proceedings appears to have stabilised, with 43% of cases adopting English, 47% adopting German, and 10% adopting other languages of the UPC (including French, Italian and Dutch).

Meanwhile, the Unitary Patent dashboard indicates that, as at 7 March 2024, some 21,146 Unitary Patents had been registered. Johnson & Johnson (followed by Siemens, Qualcomm, Samsung and LM Ericsson) continue to lead the way as applicants.

Headquarters Agreement - Milan Central Division

Following the UK's departure from the UPC framework, it was agreed that the suggested location of one of the seats of the UPC's Central Divisions should be switched from London to Milan. As this arrangement was not put in place before the UPC began operations on 1 June 2023, there needs to be a Headquarters Agreement between Italy and the UPC (this was signed on 26 January 2024, formalising the location of the third seat of the Central Division).

When up and running, Milan will hear all cases in WIPO IPC class A i.e., concerning patents relating to pharmaceuticals/chemistry including genetic engineering (apart from those involving SPCs which will be dealt with by the Paris seat). Each Central Division has a panel of two legally qualified Judges and one technically qualified Judge - these have yet to be confirmed for the Milan seat.

Court of Appeal – Access to pleadings

As reported in our February update, one of the key early issues to be resolved under the UPC framework concerns access to pleadings by non-parties, within a wider discussion about the UPC's approach to questions of transparency. Whilst the Court of Appeal's substantive consideration of this issue is awaited, it ordered on 8 February 2024 that a member of the public requesting access to the register must be represented before the UPC (despite in the Ocado/Autostore matter before the Court, Ocado did not object to the individual involved bringing the application without representation). The applicant was given 14 days to appoint a representative and for them to lodge a statement of response in the same period and, on the assumption that the applicant would appoint a representative, the parties were summoned to an oral hearing on 12 March. We will report on the outcome of that hearing in due course but the decision to insert this further hurdle into the ability to obtain access to court documents has been criticised.

Court of Appeal – Overturning of the first inter partes preliminary injunction

The Court of Appeal has overturned the first inter partes preliminary injunction (UPC_CFI_2/2023)) that had been granted by the Munich Local Division, which would have prevented Nanostring from selling in all 17 UPCA Member States. At first instance, the Munich panel reported that it was satisfied 'with a clear preponderance of probability' that 10x Genomics' patent was valid, and it was clear that provisional measures were necessary. The Court of Appeal disagreed, however, determining that it was, 'on the balance of probability, more likely than not that the subject-matter of claim 1 in the version asserted in the main request will prove to be not patentable'. The Court also held that it was more likely than not that the auxiliary request will not prove to be valid. 10x Genomics is required to bear the costs of the proceedings, being set at EUR 7 million.  

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<![CDATA[MDR Lab alumni company DraftWise secures $20 million in Series A funding]]> https://www.mishcon.com/news/mdr-lab-alumni-company-draftwise-secures-20-million-in-series-a-funding https://www.mishcon.com/news/mdr-lab-alumni-company-draftwise-secures-20-million-in-series-a-funding feedback@mishcon.com (Mishcon De Reya) Thu, 14 Mar 2024 13:51:00 GMT DraftWise, a legal technology startup and alumni of Mishcon de Reya's MDR Lab, has completed a $20 million Series A funding round. The investment, led by Index Ventures with contributions from Y Combinator and Earlybird Digital East Ventures, marks a significant milestone in the company's growth and the continued investor interest in AI-driven legal technology solutions.

DraftWise has distinguished itself in the legal technology landscape by developing an AI-powered tool that aids lawyers in drafting and negotiating contracts more efficiently by leveraging law firms' historical data and insights.

From the outset, Mishcon de Reya has been instrumental in DraftWise's development, providing not only investment but also critical feedback and product testing through its LegalTech incubator, MDR Lab. The company's growth and development were bolstered by its participation in MDR Lab's Programme, which was followed by a commercial agreement. The firm's early investment in DraftWise was part of a larger seed round following the company's completion of the Y Combinator programme.

In December 2023, DraftWise returned to the Lab to field test its latest generative AI features. This collaboration allowed for practical insights from people at Mishcon de Reya, enabling further integration of DraftWise's technology into the day-to-day work of legal professionals.

Dan Sinclair, Head of Early Stage Strategy at Mishcon de Reya, commented: "We knew when we first started working with DraftWise in 2020 that this team and product would go on to do amazing things. As investors and customers, we want to congratulate the DraftWise team on reaching this major milestone. This funding round is yet another point of validation and will provide extra tailwind to help the company as they continue to transform the legal industry."

Mishcon de Reya continues to support DraftWise as it scales its platform, reflecting the firm's commitment to innovation and adopting technologies that advance the practice of law.

Related coverage

Reuters
Legal IT Insider
Law360

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<![CDATA[Brand Matters Issue 32 | March 2024]]> https://www.mishcon.com/news/publications/brand-matters-issue-32 https://www.mishcon.com/news/publications/brand-matters-issue-32 feedback@mishcon.com (Mishcon De Reya) Thu, 14 Mar 2024 12:39:00 GMT Publication <![CDATA[AI policy and regulation: from board agenda to practical delivery]]> https://www.mishcon.com/news/tv/ai-policy-and-regulation-from-board-agenda-to-practical-delivery https://www.mishcon.com/news/tv/ai-policy-and-regulation-from-board-agenda-to-practical-delivery feedback@mishcon.com (Mishcon De Reya) Thu, 14 Mar 2024 10:21:00 GMT On the 28 February, Mishcon de Reya and NVIDIA hosted an event focused on AI policy and regulation.

Guest speakers Rafah El-Khatib and Max Beverton-Palmer from NVIDIA were joined by Partners at Mishcon de Reya, Ashley Williams and James Boyle, to provide an overview of the trustworthy AI policy in the UK and EU.

At the event, we explored the main principles of AI trustworthiness and the impending regulations set to come into force in 2024. We also discussed the ways in which NVIDIA and Mishcon de Reya can support startups and scaleups on their journey towards innovation.

You can request the full recording below

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<![CDATA[Mishcon de Reya announces pro bono partnership with the University of Law]]> https://www.mishcon.com/news/mishcon-de-reya-announces-pro-bono-partnership-with-the-university-of-law https://www.mishcon.com/news/mishcon-de-reya-announces-pro-bono-partnership-with-the-university-of-law feedback@mishcon.com (Mishcon De Reya) Wed, 13 Mar 2024 15:00:00 GMT Mishcon de Reya is delighted to announce a new pro bono partnership with the University of Law and its Legal Advice Clinics.

The firm will be giving free legal advice to clients on a range of different issues relating to family and corporate law. All sessions are observed by students at the University of Law who then question our volunteer lawyers on the client interview and their careers.

Verity Taylor, Senior Pro Bono Manager, commented: "This is a wonderful opportunity for Mishcon de Reya lawyers in our Corporate and Family teams to inspire and teach future legal professionals as well as assist clients with accessing the law when they ordinarily may not be able to afford to. We look forward to our continuing partnership with the University of Law."

Read more about the firm's Impact aims and pro bono work here.

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Recent Work
<![CDATA[AI in the Workplace: data protection issues]]> https://www.mishcon.com/news/use-of-ai-by-employers-data-protection-issues https://www.mishcon.com/news/use-of-ai-by-employers-data-protection-issues feedback@mishcon.com (Mishcon De Reya) Wed, 13 Mar 2024 12:33:00 GMT While the use of AI systems in recruitment and during employment continues to grow, it is essential for both creators and for employers, as users of AI systems, to carefully consider what types of data they will be handling and collecting, and the key data protection requirements.  

This article introduces the data protection framework that surrounds the use of AI platforms. We summarise the key legal considerations that employers should be aware of when using AI technologies in recruitment and employment.

Controller vs Processor?

When an organisation decides to process personal data for any activity, the first thing it should consider is whether it is a controller or processor of that data. If the organisation decides the purpose and means of processing data (i.e. what personal data is processed, and why – for example an employer obtaining employee or candidate data), then it is likely to be a controller.

If the organisation provides a service to a third party and the third party decides what data is to be processed and why, or the organisation is processing the personal data on the third party's instructions – for example a company that handles payroll administration for another employer - the organisation is likely to be a processor.

This role-based classification is important as the obligations on an employer depend on whether it is a controller or a processor.

As a controller, the employer is required under the UK GDPR to provide specific information (usually in the form of what is termed a "privacy notice") to employees and job candidates etc. This privacy notice should set out key information about the processing activity, such as how the personal data is going to be used, the lawful basis relied on by the employer, and the rights of employees in this regard. For example, if an employer uses an AI system to select candidates in a recruitment process, the employer should set this out in its privacy notice together with the associated lawful basis.    

Another key requirement for controllers considering the use of AI systems is to assess the risks associated with the use of an AI system before engaging in the activity - this is likely to constitute a DPIA as outlined below.  

Data Protection Impact Assessment (DPIA)

When an organisation decides to carry out a "high-risk" processing activity using personal data, it is required to assess the risks associated with the activity by carrying out a DPIA. In an employment context potential "high-risk" activities using personal data include using AI platforms in recruitment, making employment decisions on task allocation, promotion and termination, and monitoring or evaluating employees.

Using of AI platforms for activities such as candidate selection or to review employee performance are likely to be  "high-risk" activities because they involve what the Information Commissioner has classed as "innovative technology" and, furthermore, these processes can have significant impact on candidates and employees.

Some common risks associated with the use of AI based technologies include:

  • inherent inbuilt bias in the AI platform;
  • lack of transparency;
  • unfair decision making; and
  • accessing personal data without the knowledge or consent of individuals (also known as data scraping).

Consequently, when using AI-based technologies, employers should be aware of their data protection obligations. For instance, in addition to providing the usual information necessary to comply with the UK GDPR, transparency requires employers to inform employees when they are using AI systems to handle their personal data.  

Where use of AI involves automated decision-making about individuals, they also have the right under the UK GDPR to receive meaningful information about the logic involved, as well as the significance and the envisaged consequences of such processing. As a responsible operator of an AI system, an employer must be able to explain to its staff how its system works and how it reaches the decisions it does, in a way that a typical member of the public can understand.

To the extent that employers may be operating in the EU, or otherwise affected by extra-territorial provisions, these overarching principles are also echoed in the EU's incoming AI Act.

Data Subject Access Requests (DSARs)

Explainablity requirements are particularly important because employees, candidates and other individuals have the right under the UK GDPR to make a DSAR. This is a formal request made by an individual to an organisation, seeking information about and access to the personal data that the organisation holds about them. This helps individuals be aware of and verify the lawfulness of the processing of their personal data.

It is therefore important for creators of AI systems to consider how to develop the AI system to comply with the DSAR right, and for employers as users of an AI system to consider how well the system can respond to these requests.

Practical Measures

More broadly, creators and employers using AI systems should ensure the following practical measures are implemented where appropriate. This will help ensure compliance with the data protection framework applicable to the use of AI platforms, and also help manage potential risks.

  • Be clear and up front with employees about how and why you are using data (in your privacy notices and relevant policies).
  • If the employer is scraping data to train its AI model (such as extracting information from a website), it will need to complete a DPIA (and there may be legal implications beyond just data protection law).
  • Be prepared to explain how your AI model works. You should consider this a mandatory requirement if you use an AI system in a recruitment or employment context.
  • Build the AI model so that a human is involved in the decision-making process.  
  • If relevant, expect questions from investors, and others, around where you acquired your data, and be able to confirm that data was collected lawfully.

You can achieve this by using factsheets (a collection of information about how an AI model was developed and deployed), DPIAs (describing the capabilities and limitations of the system) and conformity assessments i.e. a demonstration that the AI system meets legal and regulatory requirements (insert link).

AI v Data Protection Compliance

The use of AI is increasingly coming under the regulatory spotlight, and in the UK the Information Commissioner's Office has launched the first of a series of consultations on generative AI, "examining how aspects of data protection law should apply to the development and use of the technology". It will be essential for employers to keep up to date not just with technological and legal developments in this area, but also with developments in regulatory approach and risk.

The effective use of AI in the employment context requires a comprehensive understanding of data protection laws. As AI continues to evolve, staying on top of employers' legal obligations in relation to AI is crucial for both creators and for employers using AI systems. This helps not only with regulatory compliance but also fosters trust and transparency in AI technologies.

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<![CDATA[Mishcon de Reya's Private and Real Estate Lawyers featured in Spear's Property Index 2024]]> https://www.mishcon.com/news/mishcon-de-reyas-private-and-real-estate-lawyers-featured-in-spears-property-index-2024 https://www.mishcon.com/news/mishcon-de-reyas-private-and-real-estate-lawyers-featured-in-spears-property-index-2024 feedback@mishcon.com (Mishcon De Reya) Wed, 13 Mar 2024 10:49:00 GMT James Liffen, Sonal Thakrar, Dee Aylward, Kirpal Kaur, Sarah Heritage, and Laura Odlind are all from our Property teams, across Mishcon Private and Real Estate.

The Spear's Property Index is a ranked guide of the best property advisers for high-net-worth individuals seeking expert property advice, from buying, selling, managing and investing in super-prime property in London, the wider UK, and as of 2023; Dubai and the Middle East.

Find out more about the rankings here.

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<![CDATA[What do the UK's upcoming non-dom changes mean for US persons?]]> https://www.mishcon.com/news/what-do-the-uks-upcoming-non-dom-changes-mean-for-us-persons https://www.mishcon.com/news/what-do-the-uks-upcoming-non-dom-changes-mean-for-us-persons feedback@mishcon.com (Mishcon De Reya) Wed, 13 Mar 2024 09:40:00 GMT The UK has long been an attractive option for international individuals, whether they are drawn by its business opportunities, schools, security, lifestyle or a combination of all these factors. The sweeping changes to the UK taxation of non-doms announced on 6 March 2024 may have some wondering whether it remains such a desirable option. Some current UK residents may even be wondering whether they ought to start planning a move elsewhere.

One group who may be able to be more relaxed about the upcoming changes are US persons (i.e. US citizens and green card holders). The US's global approach to taxation as well as the US-UK tax treaties can put these individuals in a better position than other non-doms who choose to move to the UK.

The current tax regime

As a matter of UK domestic law, all UK residents are subject to UK tax on their worldwide income and realised capital gains. In the case of a person who is not UK domiciled (i.e. broadly someone whose permanent home for tax purposes is outside the UK; a "non-dom"), this is subject to the remittance basis of taxation. Broadly, this means that - provided the conditions are met, including paying an annual charge after the first 7 years - UK tax is not payable on a non-dom's non-UK income and gains unless and until those sums are brought to, or used in, the UK. Non-doms may currently benefit from this favourable basis of taxation provided they have not been UK resident in 15 of the last 20 UK tax years, at which point they become 'deemed domiciled', and taxed on their worldwide income and gains, like any other UK resident.

UK inheritance tax (IHT) is generally chargeable on all UK assets, regardless of the residence and domicile status of the owner. UK domiciled persons, including deemed domiciliaries, are subject to IHT on their worldwide assets.

The upcoming changes

The Government has announced a comprehensive reform of the UK's non-dom tax regime, to take effect from 6 April 2025. The remittance basis will be abolished, replaced by a much shorter 4-year exemption from UK tax on non-UK income and gains for individuals who were not UK resident in the preceding 10 years. Whilst the changes to IHT remain subject to consultation, it is proposed that there will be worldwide IHT exposure after 10 years of UK residence, as well as a 10 year 'tail' on ceasing UK residence to lose that exposure. Trusts used to be a common planning technique for persons approaching deemed domicile, which largely enabled them to shelter their non-UK assets from IHT and shelter their non-UK income and their capital gains (other than those derived from UK land) from UK tax exposure even if they remained UK resident - but the currently generous regime will be significantly narrowed.

What does this mean for US persons?

There are several ways in which a US person may be less affected by the upcoming changes than other non-doms, and indeed less affected by the tax implications of becoming UK resident under current rules.

Balancing global taxation

The US is virtually unique in imposing worldwide taxation on its citizens, regardless of their residence. This means that US persons cannot eliminate their global tax exposure by moving to a low-tax country or undertake "fiscal nomad" planning by ensuring they are not tax resident in any country.

The flipside to this is that if a sum will in any case be subject to US taxation, it can prove favourable to align any tax charges which other countries may seek to impose on the same sum so that the two liabilities can at least be offset against one another under an applicable double tax treaty. For US persons who are UK resident, this can mean that even if they are eligible for the remittance basis under the current rules, in some circumstances claiming it may well not be the best option in the round. If income and gains will in any case be subject to US tax, it may be preferable to choose for it also to be subject to UK tax in the year of receipt. Under the new rules, this will automatically be the case for persons who have been UK resident for more than 4 years. Absent income from LLCs, S-corps and similar mismatch vehicles, credits should be available under the US-UK income tax treaty (Income Treaty) to ensure that there is no economic double taxation. Although the UK's effective tax rates are generally higher than the US's federal rates, aligning the charges at least means the sums can be considered fully taxed in both countries in the tax year of receipt, rather than – under current rules - the UK tax liability in effect having been deferred until the income or gains in question are subsequently remitted to the UK, which can cause difficulties in obtaining tax credits for any US tax already paid on the same sums.

One point which will continue to be crucial for US persons who are (or will become) subject to UK tax on their income and gains is to ensure their investments are selected and managed with an eye on both countries' tax rules. For example, most US mutual funds are "non-reporting funds" for UK tax purposes, meaning that any gain realised on their disposal will be subject to UK income tax at up to 45%, whereas it will only be subject to US federal tax at the long-term capital gains tax rate of 20% plus 3.8% NIIT; and whilst US municipal bond interest is exempt from US federal income tax, it will be subject to UK income tax at up to 45%, so the reduced yield paid to account for the preferential US tax status is often not worthwhile if UK tax exposure has to be factored in. An investment manager experienced in managing portfolios for US/UK clients can be invaluable to navigate these nuances.

Becoming US "treaty resident" for income tax purposes

Whether a person is UK resident for tax purposes is determined by the statutory residence test. This looks at a person's connections to the UK and abroad (such as where they have a home, where and how often they work etc) as well as the number of days which they spend in the UK. The broad principle is that the more connections a person has to the UK, the less time they can spend here each tax year without being UK resident.

Where a US person is UK resident, the Income Treaty sets out a process to determine where such a person should be considered "treaty resident".

Although it is heavily fact dependent and is generally not workable for those working full time in the UK, in some circumstances with careful planning, it is possible for a US person who is UK resident under the statutory residence test to be considered US treaty resident. In that case, the US will have exclusive taxing rights over their worldwide income and gains with the exception of:

  • trading income of a UK permanent establishment;
  • UK rental income;
  • capital gains from the disposal of UK land and unquoted UK land-rich entities; and
  • dividend income from UK companies (here, the UK tax is capped at 15%, being the treaty withholding rate).

Even under current rules, this is much better than relying on the remittance basis to reduce UK tax liabilities with regard to all other non-UK income and gains, as the sum in question can be brought to the UK without triggering a tax charge and there is no need to pay the remittance basis charge. Moreover, even though they are UK resident under domestic law, the US treaty resident US citizen can invest having regard to US tax considerations only, including in US mutual funds and municipal bonds without being subject to the higher UK tax rates on them.

Under the new rules, being US treaty resident could be particularly valuable for any person who has been UK resident for more than 4 years, as it will offer continuing protection from UK tax to all non-UK income and gains, which would otherwise be subject to UK tax even if not remitted to the UK.

Giving the US exclusive estate taxing rights

Although US estate tax and UK IHT are both charged at 40%, given the UK has a much lower tax-free allowance (£325,000) than the US ($13.6 million, albeit scheduled to 'sunset' to c$7 million from January 2026), exposure to IHT significantly increases a US person's global estate tax exposure by up to c.$5 million per estate.

The US-UK gift and estate tax treaty (Estate Treaty) provides that where US person who is not a UK national is 'treaty domiciled' in the US for estate tax purposes, the US has exclusive estate taxing rights over their worldwide assets other than:

  • UK real estate; and
  • UK business property of a permanent establishment (BPPE).

This can prove even more favourable than the current IHT rules applicable to non-doms who are not deemed domiciled, which restrict their IHT exposure to (all of) their UK assets: a person who is US Estate Treaty domiciled and not a UK national has no IHT exposure on any UK assets other than UK real estate and BPPE, i.e. their UK bank accounts, shares and artworks are Estate Treaty protected from IHT.

Whilst the new IHT rules remain subject to consultation, the current proposal is that after 10 years of UK residence, a person's worldwide assets will – as a matter of UK domestic law - become subject to IHT. Additionally, it is proposed that worldwide IHT exposure would – once acquired - only cease after 10 years of non-UK residence (assuming of course that the rules are introduced in the form currently proposed, notwithstanding that this remains subject to consultation). This is where the Estate Treaty can be hugely valuable by protecting against the new 10-year IHT "tail" for US citizens who return to the US by using the 'tie breaker' rules, for example if they have a permanent home in the US but not in the UK. Provided a person is Estate Treaty domiciled in the US, their IHT exposure will be limited to their UK real estate and BPPE, even if they remain in that 10-year "tail". This could offer comfort to long-term UK residents that they can in the future reduce their IHT exposure relatively swiftly upon leaving the UK, with appropriate planning.

The ability to give the US sole estate taxing rights over most assets is only available to non-UK nationals. It will therefore continue to be important that affected individuals take UK tax advice before applying for UK citizenship if they may in the future wish to rely on the Estate Treaty in this way.

Conclusion

Whilst the Spring Budget announcements represent huge changes to the taxation of non-doms, as can be seen, the US/UK treaties, as well as the US's global taxation of its citizens, provide additional options for US persons, that are not available to "regular" non-doms. Any changes to the treaties would need to be negotiated between the UK and US governments, meaning alterations would not only take time to introduce, but there would need to be transatlantic agreement that changes were warranted and in each country's interests.

There are still complex considerations at play for any US person considering entering, or already in, the UK tax net, and careful planning and specialist advice are needed to ensure the best possible outcome. Additionally, there are some one-off opportunities which non-doms – including US persons – who are, or are considering becoming, UK resident may wish to take advantage of before April 2025, or under temporary provisions applicable through to April 2027. It will, however, definitely remain possible for a US person to become and remain UK resident for more than 4 years under the new rules whilst moderating their global tax exposure, provided care is taken.

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<![CDATA[Flexible working: employer was entitled to reject a request to work 100% from home]]> https://www.mishcon.com/news/flexible-working-employer-was-entitled-to-reject-a-request-to-work-100-from-home https://www.mishcon.com/news/flexible-working-employer-was-entitled-to-reject-a-request-to-work-100-from-home feedback@mishcon.com (Mishcon De Reya) Wed, 13 Mar 2024 09:30:00 GMT After the pandemic, many employers have become more open to flexible and remote working arrangements. But how much can, or should, employers allow employees to work only from home, and on what grounds can those requests be denied? The Employment Tribunal recently considered these issues in Miss Wilson v Financial Conduct Authority, where the employer rejected a senior employee's request to work from home full-time.

The statutory framework for requesting flexible working

Employees have a right to request flexible working. This can be a change to the hours they work, to the times they are required to work and/or to their place of work.

Flexible working requests must be made in writing. Employers must consider those requests in a reasonable manner and can refuse them for one or more of eight business reasons. These include: the inability to reorganise work among other staff; the inability to recruit additional staff; the burden of additional costs; a detrimental impact on quality and/or performance; and a detrimental effect on ability to meet customer demand.

Employees can bring an Employment Tribunal claim where their employer did not handle the request in a reasonable manner; did not respond within the requisite timeframe; did not rely on one of the statutory reasons when refusing; wrongly treated the request as withdrawn; and/or rejected the request based on incorrect facts.

As mentioned in a previous article, the Government is making various changes to the right to request flexible working regime from 6 April 2024. Employees will be entitled to request flexible working from their first day in employment, rather than after 26 weeks' service. They will also be able to make two requests rather than just one in a 12-month period. In addition, employers will have to respond to requests (including any appeal) within two months, rather than three months under the current regime, although this timeframe can be extended by agreement.

What happened in this case

Miss Wilson had worked remotely since the onset of the Covid-19 pandemic in early 2020. In December 2022, she made a flexible working request to work from home permanently going forward, and to never attend a physical office location.

Her employer (the FCA) rejected Miss Wilson's request, saying that granting the request would have a detrimental impact on the quality and performance of her work. Whilst acknowledging that Miss Wilson had performed her role very well remotely, the FCA gave a number of reasons, including that:

  • Miss Wilson would not attend face-to-face training sessions, departmental away days and meetings;
  • her ability to input in management strategy meetings and to be involved with in-person collaboration would be negatively impacted; and
  • given her Senior Manager position and line management responsibilities, there was a reasonable expectation that junior colleagues should be able to meet Miss Wilson in person from time to time. This would not be possible under the requested arrangement.

The FCA rejected Miss Wilson's appeal of their decision, reiterating that, despite her strong performance, it would still be better and of real benefit if her team were able to connect with her in person.

At the time of Miss Wilson's request, the FCA had a policy in place that staff should spend at least 40% of their working time in the office. The FCA also said that this would be difficult to enforce in circumstances where one of its senior employees was not herself following that policy.

Employer took too long to go through the whole flexible working request process

Miss Wilson brought an Employment Tribunal claim arguing that the FCA had taken 21 days longer than the statutory 3 month period to go through the entire flexible working request process.

She was awarded compensation of one week's pay for the FCA's failure to deal with the appeal within the statutory 3 month period.  

But the employer had considered in detail the merits of the flexible working request

Miss Wilson also claimed that the FCA's rejection of her request was based on incorrect facts. However, the Tribunal rejected this.

Miss Wilson argued that the detriments highlighted by the FCA (including the benefits of face-to-face interactions) had been significantly overstated and were not supported by evidence, and that the FCA's technological capabilities invalidated many of the disadvantages it had cited. She also challenged the perceived detrimental impact on her ability to effectively perform her role at home, pointing to her strong work performance.

However, the Tribunal concluded that the FCA was entitled to identify weaknesses with remote working. Remote working limited the ability for individuals to observe and respond to non-verbal communication, which the FCA said forms an important part of working with others.

The Tribunal also found that remote working using technology is not well-suited to the fast-paced interplay of exchanges which can occur in meetings or in training events. Miss Wilson's senior position and managerial responsibilities were particularly relevant here and it was a valid consideration when judging potential impact on performance and quality, as she could not deliver these as envisaged by the FCA if she were to work from home permanently.

As the FCA had given detailed consideration to Miss Wilson's request and to the issues it had identified, it had not based its decision upon incorrect facts.

What this means for employers

Remote working in the modern workplace will likely form the subject of further litigation. However, there have been surprisingly few cases on it in a post-Covid-19 environment, which makes this a notable Tribunal decision.

This case highlights that some physical attendance at work can have advantages over exclusive remote working. What is clear, however, is that this is fact-sensitive and there is no 'one size fits all' approach for all employers or for all roles within an employer: each situation will require its own consideration.

It is worth noting that Miss Wilson did not give any reason for her request to permanently work from home. Had she done so, and that reason had involved, for example, caring responsibilities or health-related matters - which can raise potential discrimination issues - the relevant considerations and outcome may have been different.

More generally, different employers, and even different parts of a business within an employer, may place different value on the importance of face-to-face interactions.

This case also highlights the importance of striking the right balance between offering flexible working arrangements (which can help attract and retain the best talent) and meeting business needs. Having a clear, tailored policy in place and making sure that this is kept under review will be a key step in helping to resolve potential conflicts.

If you would like more information or support on flexible working, please get in touch with your usual Mishcon contact or with a member of the  Employment team.

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Article
<![CDATA[The unjustified threats regime: Eleanor Wilson for World IP Review]]> https://www.mishcon.com/news/the-unjustified-threats-regime-eleanor-wilson-for-world-ip-review https://www.mishcon.com/news/the-unjustified-threats-regime-eleanor-wilson-for-world-ip-review feedback@mishcon.com (Mishcon De Reya) Wed, 13 Mar 2024 09:24:00 GMT Mishcon de Reya Associate Eleanor Wilson has written a piece for World IP Review discussing the UK's unjustified threats regime.

Eleanor's article analyses the regime around unjustified threats of intellectual property litigation, focusing in particular on rights holders' use of notice and take down procedures on online marketplaces.

Read here (subscription required).

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Article
<![CDATA[Antonia Felix and Alice Mantle join My Surrogacy Journey - The Podcast]]> https://www.mishcon.com/news/podcasts/antonia-felix-and-alice-mantle-join-my-surrogacy-journey-the-podcast https://www.mishcon.com/news/podcasts/antonia-felix-and-alice-mantle-join-my-surrogacy-journey-the-podcast feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 16:49:00 GMT Antonia Felix and Alice Mantle, members of Mishcon de Reya's Surrogacy and Modern Families team, were featured in the latest episode of My Surrogacy Journey - The Podcast (S3, E10).

They joined host Wes Johnson-Ellis to talk about the various elements of international surrogacy.

Among the topics discussed were:

  • The critical role of parental orders in establishing legal parentage after surrogacy.
  • The risks associated with relying on emergency travel documents for newborns in surrogacy arrangements.
  • The influence of budgets and timeframes in selecting an appropriate destination.
  • The variations in in surrogacy laws across different jurisdictions, including across Europe and the United States.
  • Additional considerations such as marital status, visa status, and the impact of being a British national or intended parent on the child's citizenship and passport eligibility.

Listen to the episode of My Surrogacy Journey: The Podcast here via Spotify on your desktop and mobile.

About My Surrogacy Journey

Co-founders of My Surrogacy Journey, Wes Johnson-Ellis, and his husband Michael Johnson-Ellis, are fathers of two children via surrogacy. They created My Surrogacy Journey as they believed domestic and international surrogacy lacked tailored and balanced support and they wanted to bring about change.  

You can read more about their story here.

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Podcast
<![CDATA[Women in Wealth: Girls are investors too]]> https://www.mishcon.com/news/podcasts/women-in-wealth-girls-are-investors-too https://www.mishcon.com/news/podcasts/women-in-wealth-girls-are-investors-too feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 15:29:00 GMT In our latest podcast episode, Emily Knight, Managing Associate in the Employment Team is joined by Charlotte Yonge, who is a Fund Manager at Troy Asset Management. Charlotte is also the Founder of a charity called GAIN which stands for ‘Girls Are Investors’. GAIN was set up to promote and inspire girls to pursue a career in investing. Emily spoke to Charlotte about why women historically invest less than men, what is being done to change it and some of the myths and stereotypes around gender and investing.

This podcast is part of the Women in Wealth series, which is a Mishcon de Reya initiative with the aim of supporting female holders of private wealth and their advisers.

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Podcast
<![CDATA[New changes under the Charities Act 2022: Mergers, constitutions, land and trustees]]> https://www.mishcon.com/news/new-changes-under-the-charities-act-2022-mergers-constitutions-land-and-trustees https://www.mishcon.com/news/new-changes-under-the-charities-act-2022-mergers-constitutions-land-and-trustees feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 14:34:00 GMT The latest instalment of the Charities Act 2022 (the "Act") is being implemented today (7 March 2024), introducing technical legal changes that are designed to modernise and simplify the regulation of charities in England and Wales for charities and their charity trustees.

This is the third instalment and makes changes in the following four key areas.

1. Charity governing documents  

The Act introduces a streamlined statutory power allowing trusts and unincorporated associations to change their governing documents more easily. The new power simplifies the process for charities, as the powers to be used to make changes will no longer differ depending on the income of the charity or the type of change being made. 

The changes also align the Charity Commission's approach to charitable companies, Charitable Incorporated Organisations (CIOs), and unincorporated charities when:

  • applying the legal test when deciding whether to authorise changes to their charitable purposes; and
  • giving approval for certain 'regulated alterations' to governing documents (such as changes to a charity's purposes, winding up clause and trustee benefit clauses).
2. Charity land transactions

Initially scheduled for June 2023 but delayed until now, these new provisions make further changes to the legal framework for disposals of charity land (including freehold, leasehold and mortgages among other disposals). The Act introduces:

  • Changes to the statements and certificates that must be included in property contracts and transfers.
    • Trustees will no longer have to certify compliance with the rules on disposals of property personally, instead the charity will confirm compliance through statements in the transaction documents.
    • It will be important for charities to use the new wording to ensure transactions are registered smoothly by the Land Registry.
  • Changes to the rules on disposals by liquidators.
    • The Act clarifies that disposals by various parties in control of charity assets, such as liquidators and receivers, will not be subject to the restrictions on disposals of charity land, which should reduce the burden on charities and the Charity Commission in those situations.
    • This change aims to increase clarity and consistency for property transactions for charities and simplifies the execution of property transaction documents.
3. Simplifying charity mergers

The Act introduces new rules that aim to protect legacies that might otherwise have been lost following a merger of charities. The new rules allow gifts made to a charity which has since merged to take effect as a gift to the merged charity (if it is on the Register of Mergers), removing the need, in most cases, to retain a shell charity following the merger.

4. Charity trustees

The Act  gives the Commission new powers to authorise payments to trustees for work completed for the charity and confirm defective trustee appointments.

What changes are still to be made?

This is the latest round of legal updates to modernise and simplify the governance of charities following the Law Commission's detailed report and proposals on Technical Issues in Charity Law.

These changes almost complete the implementation programme for the Charities Act 2022. The only provisions not yet implemented are modified rules on ex-gratia payments – payments by a charity on moral rather than legal grounds. The ex gratia changes were mainly intended to simplify the process for charities to make uncontentious ex gratia payments, but were put on hold when the Government realised that they might also be used for more contentious transfers, such as the deaccessioning (or repatriation) of cultural artefacts from major national museums. They are now expected to be implemented later in 2024, but with measures to exclude transfers of cultural artefacts.

If you would like further details on how the changes might benefit your charity or affect an ongoing project, please contact Chris Willis Pickup or Rosie Lucas in our Charities & Social Ventures team.

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<![CDATA[Mishcon de Reya supports education initiative to introduce the law to thousands of young learners]]> https://www.mishcon.com/news/mishcon-de-reya-supports-education-initiative-to-introduce-the-law-to-thousands-of-young-learners https://www.mishcon.com/news/mishcon-de-reya-supports-education-initiative-to-introduce-the-law-to-thousands-of-young-learners feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 12:22:00 GMT Mishcon de Reya is supporting the education charity Young Citizens’ campaign to introduce the law to thousands of children and young people across England and Wales.

Running from the 11th to 22nd March 2024, The Big Legal Lesson will provide schoolteachers with free resources to start conversations about the law, justice and human rights with confidence in their classrooms.

Young Citizens is also calling on legal professionals to volunteer to deliver The Big Legal lesson in a local school, giving children and young people a unique insight into the sector.

The charity’s specially created resource packs include age-appropriate lesson plans exploring what the law is, who has the power to change it, and how these changes affect our daily lives.

Now in its fifth year, The Big Legal Lesson has already reached over 200,000 learners from ages 5-18, making it the biggest public legal education event of its kind.

The campaign comes after a Young Citizens poll found that just 13% of students had received a lesson on the law by the time they reached A-Levels. Law for Life also found that almost two thirds of the UK don’t know their basic legal rights and called for more robust provision of legal education.

Verity Taylor, Senior Pro Bono Manager at Mishcon de Reya, said: “We are excited to sponsor The Big Legal Lesson for a third consecutive year. Legal literacy is vital for business, democracy and justice, but very few children and young people encounter the law during school. For this to change, we believe teachers need free and flexible resources to introduce topics like rights, responsibilities and the rule of law. We hope The Big Legal Lesson continues to help children and young people access the knowledge, skills and motivation to engage meaningfully in society as active citizens.”

Sherine Krause, Interim Executive Director, said: “I am delighted to see The Big Legal Lesson return in 2024. At Young Citizens, we believe that all children and young people should understand their rights, responsibilities and the rule of law, whether or not they pursue a career in the legal sector. With the support of Mishcon de Reya, we know this year's campaign will once again light the spark of legal literacy for thousands of learners across England and Wales.”

You can follow school engagement on social media using #TheBigLegalLesson.

About Young Citizens

Young Citizens is a national charity lighting the spark of active citizenship in the next generation. Established in 1989, it delivers skills, knowledge and enrichment to over half a million children each year through a dynamic range topical classroom resources and immersive learning experiences.

Their team of education experts works to equip young minds with the confidence to shape both local communities and powerful systems. They do this by mobilising teachers, professionals and policy makers to transfer expertise to the people who need it most, making complex current affairs accessible to all. Ultimately, they want to see a thriving, inclusive and youth-led democracy.

Related coverage

Legal Cheek
Law Gazette
Solicitors Journal

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Recent Work
<![CDATA[EPO update: Guidance on acceleration of opposition proceedings and the introduction of electronic signatures]]> https://www.mishcon.com/news/epo-update-guidance-on-acceleration-of-opposition-proceedings-and-the-introduction-of-electronic-signatures https://www.mishcon.com/news/epo-update-guidance-on-acceleration-of-opposition-proceedings-and-the-introduction-of-electronic-signatures feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 11:35:00 GMT Acceleration of opposition proceedings

We recently reported that the European Patent Office (EPO) would accelerate its processing of parallel opposition proceedings. This acceleration occurs when the EPO is informed by the Unified Patent Court (UPC), a national court, or competent authority of a contracting EPC member state that an infringement or revocation action relating to a European or Unitary Patent has been brought before it. The EPO has now issued guidance on how the timing of when it is informed of the parallel action will impact how the opposition proceedings are accelerated.

The new measures will take immediate effect and will also be applied to pending opposition proceedings.

The EPO's process for accelerating its proceedings is explained with reference to the following five scenarios of when the notification of parallel proceedings takes place:

  1. During the opposition period - After the opposition period expires, the EPO will invite the proprietor to comment on the opposition within three months (instead of the usual four months). The EPO will then issue a summons to oral proceedings within two months of receipt of the proprietor's reply, setting the minimum period of two months until the hearing date (unless the parties agree to a shorter period).
  2. After expiry of the opposition period but before the proprietor's reply to the opposition - The EPO will issue a summons to oral proceedings within two months of receipt of the proprietor's reply, again setting the minimum period of two months until the hearing date (unless the parties agree to a shorter period).
  3. After the proprietor has replied but before a summons has been issued - The EPO will issue a summons to oral proceedings within two months of receipt of the information on parallel proceedings, again setting the minimum period of two months until the hearing date (unless the parties agree to a shorter period).
  4. After a summons has been sent - The EPO will reschedule oral proceedings to the earliest possible date (provided that the time saving is significant).
  5. After the decision has been pronounced at the Oral Proceedings - The Opposition Division will issue its written decision and the minutes within one month of the hearing.

If you'd like to discuss how these measures may affect an existing opposition, or how they may impact future opposition strategy, please get in touch.

Signatures

Applicants will be pleased to know that following a Decision of the President of the EPO, electronic signatures will be permitted on documents used as evidence to support a request for the EPO to register a transfer of rights or a licence. This includes a text string signature and a normal digital signature. This much welcomed simplification of procedure comes into effect from 1 April 2024.

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<![CDATA[Oxford+ podcast: Nicholas Lyons]]> https://www.mishcon.com/news/podcasts/oxford-podcast-nicholas-lyons https://www.mishcon.com/news/podcasts/oxford-podcast-nicholas-lyons feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 11:08:00 GMT Nicholas Lyons is the former Lord Mayor of the City of London, a position he held following a 21-year career in executive roles in investment banking. In his current role, as the Chair of the Phoenix Group, the UK's largest pension provider, Nicholas' leadership has left an enduring mark on the financial landscape, highlighted by his advocacy for the Mansion House Compact, through which insurance companies and pension funds committed to invest 5% of their capital into UK-listed companies and infrastructure by 2030.

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Podcast
<![CDATA[Exhibition Tax Relief - a Lasting Commitment to the Arts]]> https://www.mishcon.com/news/exhibition-tax-relief-a-lasting-commitment-to-the-arts https://www.mishcon.com/news/exhibition-tax-relief-a-lasting-commitment-to-the-arts feedback@mishcon.com (Mishcon De Reya) Tue, 12 Mar 2024 10:00:00 GMT The Spring Budget provided further details on the £100 million 'Levelling Up' fund for cultural projects announced in November 2023, revealing that £52.6 million has been earmarked for six "nationally significant cultural investments." Notably, £10 million has been allocated to National Museums Liverpool, and £2.6 million to V&A Dundee.

It was also announced that the Museums & Galleries Exhibition Tax Relief (MGETR) would be made permanent, effectively removing the sunset clause on the relief. The extension of this valuable relief will be welcomed by the directors and trustees of museums and galleries as they look to source additional funds.

Understanding the Relief

The MGETR is a tax relief afforded to certain companies that present an exhibition. MGETR will now permanently provide for a 45% tax relief on touring exhibitions and 40% for non-touring exhibitions. The relief allows eligible institutions to claim a corporation tax deduction, or a payable tax credit based on their qualifying expenditure.

A charitable company (or a company wholly owned by a charity or local authority) will be a qualifying company and museums and galleries will generally satisfy this test. To be classified as a primary production company, significant contributions in creative, technical, or artistic capacities are essential. This encompasses active involvement in various stages such as planning, decision-making, negotiations, contracts, and the management or production of the exhibition. Secondary production companies are generally responsible for the production and operation of the exhibition at the venue.

The exhibition itself must be a public display featuring an organised collection of objects or works that hold scientific, historical, artistic, or cultural significance. A minimum of 25% of the expenditure on producing and dismantling the exhibition (referred to as 'core costs') must be allocated to goods or services sourced from within the UK or the European Economic Area.

Certainty for Cultural Institutions

Objectively, the announcement in the Spring Budget is a step in the right direction for the safeguarding of the UK's cultural institutions. It is a promising sign of support from the Government and the permanent extension of MGETR will ultimately benefit museums and galleries across the UK.

Please do reach out to the Art Law and Tax & Wealth Planning teams at Mishcon de Reya for further advice on MGETR, including its practical implications and how to make the most of this valuable relief.

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Article
<![CDATA[Mishcon de Reya advises on forward funding deal for Watkin Jones]]> https://www.mishcon.com/news/mishcon-de-reya-advises-on-forward-funding-deal-for-watkin-jones https://www.mishcon.com/news/mishcon-de-reya-advises-on-forward-funding-deal-for-watkin-jones feedback@mishcon.com (Mishcon De Reya) Mon, 11 Mar 2024 14:41:00 GMT Mishcon de Reya has advised Watkin Jones on the successful exchange of a significant forward funding agreement.

The forward funding deal concerns a new 260-bed Purpose Built Student Accommodation (PBSA) development located at Gas Lane in Bristol. This venture introduces a new collaboration between Watkin Jones and Hines, acting on behalf of the Hines European Property Partners Fund (HEPP), to the real estate sector – and underlines the continued attractiveness of PBSA to investors.

With practical completion of the development expected in time for the 2025/26 academic year, the project will provide an answer to the pressing demands for student housing in Bristol. It will be part of the Bristol Temple Quarter regeneration initiative (one of the UK's largest urban regeneration zones), aiming to revitalise the area while providing high-quality living spaces for students, including 219 ensuite cluster bedrooms and 41 self-contained studios.

Ed Hughes-Power stated "We are delighted to have worked alongside Watkin Jones on this PBSA transaction. The deal underlines the continued success of the PBSA sector given the well-documented demand and supply issue caused by the increasing number of students going into higher education and the lack of quality student accommodation. The deal reinforces Mishcon de Reya's deep expertise in the alternative residential space, and our track record of advising on market leading deals in the sector."

The Gas Lane development is designed with sustainability at its core, aiming for BREEAM Excellent and WiredScore Silver certifications. The project will feature environmentally conscious elements such as extensive bicycle parking, biodiverse roofing, and wildlife-friendly landscaping, aligning with Watkin Jones' ESG strategy.

The Mishcon de Reya team was led by Ed Hughes-Power (Partner, Real Estate) and Adam Goldthorp (Associate, Real Estate) with assistance from Simon Hunter (Partner, Construction), Will Chung (Managing Associate, Construction), Anita Rivera (Partner, Planning), Rebecca Gough (Associate, Planning), Alex Clough (Partner, Construction Litigation), Jonathan Legg (Partner, Real Estate Tax), Isabella Adams (Managing Associate, Real Estate Tax), Oliver Neasham (Managing Associate, Real Estate) and Rebecca Murphy (Trainee, Real Estate).

With over 130 fee earners including 43 partners, Mishcon de Reya's Real Estate department is one of London’s largest and most diverse property teams. Our Real Estate department comprises well-regarded specialist practice areas and provides a one stop shop for all of our clients' property requirements. The team provides a seamless service from investment, structuring, funding, acquisition and planning, through to construction, development, tax and litigation advice.

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Recent Work
<![CDATA[Amazon's US website found to target UK and EU consumers]]> https://www.mishcon.com/news/amazons-us-website-found-to-target-uk-and-eu-consumers https://www.mishcon.com/news/amazons-us-website-found-to-target-uk-and-eu-consumers feedback@mishcon.com (Mishcon De Reya) Mon, 11 Mar 2024 14:01:00 GMT The Supreme Court has upheld the judgment of the Court of Appeal (which we reported on here) in Lifestyle Equities v Amazon, ruling that Amazon was liable for trade mark infringement because of the manner in which it advertised and offered for sale goods to UK and EU consumers through its .com website.

The decision provides useful guidance on what amounts to 'targeting' within the context of cross-border ecommerce and when this will amount to trade mark infringement in the UK and EU. Retailers whose websites are primarily directed to consumers in other countries will need to review their sites to ensure they are not inadvertently targeting the UK and leaving themselves open to a potential trade mark infringement claim.    

Background

The case involves two parties selling identical goods bearing identical trade marks. The UK party (Lifestyle Equities) is authorised to use the trade marks in the UK and EU. The US party (a commercially unrelated party) is authorised to use the trade marks in the US.

The US party sold its goods via Amazon.com (and other Amazon-affiliated services), which UK and EU consumers could access and purchase the US branded goods from. The UK party saw this as an encroachment on its trade mark rights and brought infringement proceedings against Amazon.

The key issue in the case was whether Amazon had targeted UK and EU consumers through the advertising and offering for sale of the US branded goods on Amazon.com. The High Court ruled there was no such targeting as the US branded goods were meant for the US market and UK consumers would need to specifically look for those products on Amazon.com to buy them. The Court of Appeal overturned the High Court decision, finding that Amazon's advertisements and offers for sale did target UK and EU consumers.

Supreme Court decision

The Supreme Court agreed with the Court of Appeal's finding, albeit for slightly different reasons. Based on the following factors, it found that Amazon was targeting consumers in the UK:

  1. A message on the landing page and almost all subsequent pages offered to "Deliver to the United Kingdom"
  2. The pages specified which of the goods displayed could be shipped to the UK and which could not.
  3. A “review your order” page offered to sell the relevant goods to a consumer at a UK address, with UK specific delivery times and the option to pay in sterling.

The Court also considered a number of factors against targeting of the UK, including a message on the landing page about using the UK website instead of the US website and that the default prices displayed on the US website were in US dollars (albeit there was an option to change currency on the landing page, with sterling expressly included as an option). Ultimately, the Supreme Court found that the factors favouring the conclusion that Amazon targeted UK consumers greatly outweighed the factors which might point in the opposite direction.

It is worth noting that, in its analysis, the Supreme Court stated that delivery of goods to a particular country does not automatically mean there is targeting of that country. It held that "Whether or not there has been targeting in the relevant sense depends upon what is done up to the moment of the conclusion of the contract of sale, not thereafter."

Non-targeted sales

Lifestyle Equities also argued that, even if it was found that Amazon did not target consumers in the UK/EU, it nonetheless infringed Lifestyle Equities' marks by selling and delivering the goods through its US website to consumers in those territories.

However, the Supreme Court refused to opine on this issue as it did not arise in the circumstances of this case, given it had found that there was targeting. It also considered that the case law on this point (the decision of the Court of Justice of the European Union in Blomqvist v Rolex) did not provide a sufficiently detailed description of the underlying facts for the Supreme Court to form a reliable view, despite the Court of Appeal having found that the sale and delivery of products in this scenario would infringe.

Comment

The Supreme Court's decision on targeting is welcome news for brand owners and licensees who trade on a licensing basis. It underscores the importance of understanding how online retail practices operate and will help brand owners and others enforce their rights against any online encroachment of their operational territories.

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Article
<![CDATA[Art Lending under the Government Indemnity Scheme]]> https://www.mishcon.com/news/art-lending-under-the-government-indemnity-scheme https://www.mishcon.com/news/art-lending-under-the-government-indemnity-scheme feedback@mishcon.com (Mishcon De Reya) Mon, 11 Mar 2024 11:53:00 GMT Thinking of loaning a work to a UK gallery or museum?

Private loans are a fundamental part of many exhibitions in the UK, contributing to the cultural enrichment of society. They are opportunities for students, experts and the general public to view artworks that would otherwise not be visible. These pieces often attract wider audiences, provide fresh perspectives and valuable academic insight. Loans can also potentially increase the value of a work: displays at institutions are an excellent marketing opportunity in the event of a future sale, and can significantly add to an artwork's provenance.

The Government Indemnity Scheme (GIS)

A substantial proportion of loans to non-commercial institutions in the UK are not commercially insured. The yearly cost of taking out commercial insurance, with increasing policy rates, would be too much for these institutions to bear. Instead, if the value of the work is over £1,001, it can be covered on a "nail-to-nail" basis by the GIS, administered by Arts Council England, subject to conditions. The institutions need to apply to be part of the GIS, signing an undertaking to safeguard and care for the loaned objects in the same way as they do for objects they own, among other requirements. The cover is only for works borrowed by the relevant institutions, and they are not able to lend their own collection works using the scheme.

In 2022-23, over 29,000 works were loaned under the GIS, with a total indemnity value of £21.9bn. On the basis that commercial insurance is charged at between 0.1-0.75% of the total value of items borrowed, the GIS estimates that the scheme has saved between £21m - £159m in commercial insurance premiums.[1] This enables institutions to, quite appropriately, direct their funds towards their core purposes. The GIS facilitates a wider display and appreciation of items, that would have otherwise been impossible. In setting the terms for the scheme, this in turn raises the standards for the protection of works across the UK and arguably beyond, as it has been used as a model for similar schemes abroad.  In summary, the GIS is a means to encourage cultural philanthropy in a way that is both cost effective and yet still protective of loaned works.

Interestingly, the GIS has also been used as part of a recent restitution solution: in 2022, the Horniman Museum and Gardens transferred the ownership of 72 Benin objects to the National Commission for Museums and Monuments in Nigeria. While six were returned, the remaining 66 remain in the museum on loan, covered by the GIS, from the National Commission to encourage research, learning and engagement. This demonstrates the wider and global cultural significance of the scheme: it is not simply a financial solution but a key determiner in the development of the UK's cultural initiatives. [2]

The risks of a loan

Before considering any loan of an artwork, it is important to think about the risks involved. The moment an artwork leaves its usual premises, be it a home or storage facility, the risks dramatically increase. Damage or loss can occur during transport, packaging and during its public display, by various causes including human error, criminal acts, flood, fire or other unforeseeable events. Unlike financial loans, an artwork's value goes far beyond what can be repaid. No financial sum can truly replace a piece of art or historical object that has been lost or stolen. Even if it is eventually recovered, the emotional toll and work involved can be hugely distressing. If an artwork is damaged, it cannot be made whole, no matter how fine the restoration work may be, and the damage will always remain part of the artwork's provenance.

What is recoverable is the financial loss that has been suffered, but this is only possible if the loan agreement is valid and appropriately drafted to protect the lender's position. It is therefore important to seek advice when provided with a loan agreement and to not necessarily accept the terms as standard or unnegotiable.

The loan agreement

Key points of negotiation in a loan agreement are usually: the value of the work, the transport and  storage requirements, the security and display of the work, the credit line, the length of the loan and the limits of the insurance or indemnity coverage. The conversations around these terms will depend on the type of artwork being loaned (e.g. is it a media file, a painting or a sculpture), its fragility, its financial value, its significance to the exhibition, and the significance of the lender to the borrower. It is important to consider each of these factors when negotiating the terms, to avoid the deal falling through.

It should go without saying that it is important to ensure that the loan agreement is valid and properly executed, however this can fall through the cracks where, for example, practical timings to display the work take over. Without a signed agreement, there is a risk that the work (and therefore the lender) is not contractually protected. While there may be some options available under common or tort law, depending on the circumstances, the arguments will be significantly less clear-cut.

GIS coverage

Like commercial insurance, there are limits to the coverage offered by GIS, which will need to be checked carefully. For example, GIS has strict limitations on how the work is to be transported and does not cover for sea freight. It is also crucial that the loan agreement, or a separate addendum, sets out the following conditions:

  • no restoration or conservation work is carried out on the object without the prior agreement of the owner;
  • the borrower is under no liability for the loss of, or damage to, the object arising or flowing from:
    • war, hostilities or war-like operations, but excluding acts of terrorism, riot, civil commotion, piracy and hijacking;
    • the negligence or other wrongful act of the owner, his servants or agents;
    • the condition (including inherent vice or a pre-existing flaw) of the object at the time of its loan;
    • restoration or conservation work undertaken to the object by the borrower, his servants or agents with the agreement of the owner; or
    • a third party claiming to be entitled to the object; and
  • any liability which the borrower may incur to the lender arising out of the loan of the object shall not exceed the specified value. [3]

Where an institution fails to set out these limits, the GIS will fail and there will be no basis for it to pay a claim. In other words, the institution will be financially liable. While this concern largely rests with the institution, it is important to be aware that, as a lender, should such circumstances arise, recovering any losses will likely become more complicated and drawn out. It is therefore in both parties' interest to ensure that the GIS coverage is valid.

When to seek help

Prevention is far better than cure. A clear and valid loan agreement is the best protection when lending items and arguably costs considerably less in the long run, should loss or damage occur.

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Article
<![CDATA[Surrogacy Laws in Hong Kong - Time for a Change: Jonathan Mok for the Hong Kong Lawyer]]> https://www.mishcon.com/news/surrogacy-laws-in-hong-kong-time-for-a-change-jonathan-mok-for-the-hong-kong-lawyer https://www.mishcon.com/news/surrogacy-laws-in-hong-kong-time-for-a-change-jonathan-mok-for-the-hong-kong-lawyer feedback@mishcon.com (Mishcon De Reya) Fri, 08 Mar 2024 17:38:00 GMT Jonathan Mok, Partner in Karas So's Private Wealth Team, has written an article for the Hong Kong Lawyer, looking at the recent developments in surrogacy arrangements in Hong Kong.

The article covers three main issues, with a focus on how children born through overseas surrogacy arrangements can settle in Hong Kong and the legal avenue available to intended parents.

Read the full article on Karas So LLP

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Article
<![CDATA[The primary AI and ML solutions to consider for your business]]> https://www.mishcon.com/news/the-primary-ai-and-ml-solutions-to-consider-for-your-business https://www.mishcon.com/news/the-primary-ai-and-ml-solutions-to-consider-for-your-business feedback@mishcon.com (Mishcon De Reya) Fri, 08 Mar 2024 17:30:00 GMT It’s well known that AI and machine learning (ML) offer a wealth of practical solutions that can transform your business. It is now estimated that nearly half of businesses are now using ML in their operations. But the magnitude of AI applications available makes it hard to know what will work best for your business. When it comes to AI and ML solutions, picking a project that aligns with your overall business strategy is the answer. So, if looking to implement AI into your operations then here is a selection of some of the primary use cases for you to consider.

Streamlining operations and boosting efficiency

One of the biggest use cases for AI and ML is increased productivity, and there are many ways AI can achieve this. Repetitive tasks, manual data entry, and inefficient workflows all hinder your business growth and eat into your bottom line. ML can automate low-value tasks, freeing up your employees’ time so they can focus on the more strategic elements of their workload.

Businesses that provide physical products can use AI algorithms, such as demand forecasting, to analyse historical data and market trends to accurately predict the future. This then allows them to optimise their inventory, streamline their supply chain and allocate resources more effectively.

ML-powered predictive maintenance can also analyse sensor data from equipment to predict potential failures and proactively schedule maintenance, minimising downtime and costs in industries such as manufacturing.

Read full article on MDRx

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Article
<![CDATA[CJEU rules in relation to personal data and advertising]]> https://www.mishcon.com/news/cjeu-rules-in-relation-to-personal-data-and-advertising https://www.mishcon.com/news/cjeu-rules-in-relation-to-personal-data-and-advertising feedback@mishcon.com (Mishcon De Reya) Fri, 08 Mar 2024 14:35:00 GMT On 7 March 2024 the Court of Justice of the European Union (CJEU) issued its judgment in response to two questions that were referred to it by the Belgian Court of Appeal, about protocols related to what is known as “Real-Time Bidding” (RTB) for targeted online advertising.

The questions stem from an appeal by IAB Europe in relation to the Belgian Data Protection Authority's (DPA) assessment of IAB Europe’s status as a data controller under the EU GDPR. The DPA's litigation department had issued corrective measures and imposed an administrative fine against IAB Europe following a series of complaints received since 2019.

The judgment provides clarity on how tracking numbers referred to as the “TC String” might be categorised as “personal data”, and the situations in which a sectoral organisation might be a controller or joint controller of data under the EU GDPR.

Most people will be familiar with the cookie pop-ups on websites that request consent for advertising purposes. RTB is the most common system for placing adverts on websites. The RTB system involves advertisers in a variety of industries live bidding during an individual's use of a website for the advertising on the site. Under the EU GDPR, RTB had become difficult to operate as the tracking and targeting of individuals required prior consent which was difficult to achieve in a compliant manner, particularly as the concept of "consent" has developed and the penalties for non-compliance have increased under EU GDPR.

IAB Europe is a European advertising group, which developed, implemented, and promoted a framework and platform which allowed for the collection of consent, to enable the RTB system. The framework involves the large-scale processing of data and the application of a string of character-based code with advertisers and data brokers to track the individual's consent and interests for targeting advertising. This code, referred to as the “TC String", facilitated the RTB process by interacting with a cookie placed on the individual's browser, to identify whether they had consented to the processing of their information for the purpose of the targeted advertising. The cookie is also connected to the IP address of the individual.

The data used for the targeted advertising included various data shared and collected by advertisers who rely on the “legitimate interests” lawful basis for processing contained within Article 6(1)(f) of the EU GDPR. The personal data ranged from gender, age, information on the individual's location and recent search and purchase history.

IAB Europe argued that it was not a controller as it did not process data itself, but only established the system and rules for processing.

The two questions referred to the CJEU can be distilled into the following: (i) was the TC String personal data, and (ii) was IAB Europe, as the implementer of the framework for the TC String, a "controller" for the purpose of the EU GDPR?

TC String as Personal Data

The DPA argued that the TC String is personal data according to the definition at Article 4(1) of the EU GDPR, on the basis that when linked with other data, the individual user to whom it relates becomes identifiable. The CJEU found that the scope of Article 4(1) was intentionally wide, and in line with existing case law on the matter, where it was possible that the individual could be identified, then the data was personal. The court agreed with the view of the DPA and found that IAB Europe and its members had sufficient access to information to combine with the TC String to make it identifiable, meaning that it was personal data within the scope of Article 4(1).

IAB Europe as a Controller

Under Article 4(7) a controller is an entity which jointly or with others determines the purposes and means of processing the personal data. The CJEU recalled that an entity that exerts influence over the processing of personal data is also a controller, referencing by analogy Jehovan todistajat C-25/17 10 July 2018. The CJEU said also that IAB Europe set out rules within the framework as to how the TC String containing the details of an individual's consent may be used, stored and shared, and would revoke access to the Strings should members fail to abide by the rules. Accordingly, it is exerting influence over the processing of personal data. Therefore, the court considered the IAB Europe was a joint controller, despite the fact that the organisation of the framework was such that IAB would never have direct access to personal data beyond the TC Strings. However, the joint controllership does not extend to the subsequent processing of data that occurs by third parties for the targeting of adverts based on their preferences.

This decision will have an impact on all digital processing in the EU as it highlights just how broad the protections under GDPR should be applied. It continues a trend in the CJEU of being willing to find joint controllership. It may also mean that, in time, we see significant changes in how consent to data processing is obtained and shared within the digital advertising industry which, for consumers, may mean changes to cookie banners.

It’s important to note that, post-Brexit, judgments of the CJEU in relation to the EU GDPR do not apply in the UK, let alone bind the domestic courts or the Information Commissioner’s Office (though the UK courts may 'have regard' to those decisions). So, although the CJEU’s findings should be noted, especially by anyone who makes use of the TCF framework, it remains uncertain what the effect of the judgment will be in the UK.

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Article
<![CDATA[Tax Aware: abolition of the UK's non-dom regime]]> https://www.mishcon.com/news/events/current/tax-aware-abolition-of-the-uks-non-dom-regime-online https://www.mishcon.com/news/events/current/tax-aware-abolition-of-the-uks-non-dom-regime-online feedback@mishcon.com (Mishcon De Reya) Thu, 21 Mar 2024 09:00:00 GMT On 6 March 2024, the Chancellor announced "abolition of the UK's non-dom regime". The announcements are significant, particularly for internationally mobile people.  Please join us for a discussion on the impact of the proposed changes, where we will discuss how the proposals could affect those based in the UK, those looking to move to, or invest in, the UK, and those who are from the UK originally but reside elsewhere. 

We will be live streaming this session. Please register by completing the below. 

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Events
<![CDATA[Women in Wealth: Empowering Equity - female owners and donors]]> https://www.mishcon.com/news/podcasts/women-in-wealth-empowering-equity-female-owners-and-donors https://www.mishcon.com/news/podcasts/women-in-wealth-empowering-equity-female-owners-and-donors feedback@mishcon.com (Mishcon De Reya) Fri, 08 Mar 2024 12:23:00 GMT Against the backdrop of International Women's Day on 8 March and as part of our Women in Wealth initiative, our latest Mishcon Academy Digital Sessions podcast "Empowering Equity: Female owners and donors" celebrates the successes of increasing the numbers of women in ownership positions, explores the on-going barriers to female capital wealth creation in business, and highlights the propensity of women to nevertheless be benevolent to wider society with pay-it-forward financial support.

Host Liz Hunter and guests Andra Ilie and Gabbi Stopp share statistical insights and developing trends both in the UK and globally regarding approaches to family business ownership and leadership, through a gender lens. They also examine the diversity representation when it comes to participation in employee share plans operated by UK employers, share ideas on what more could be done to improve this, and then delve into the impact that female donors are making in the world of philanthropy and charitable giving.    

Host and chair:  Liz Hunter –  Partner, Mishcon de Reya LLP 

Liz advises on equity incentives and venture capital tax reliefs. Advising private entrepreneurial businesses, family and employee-owned companies and listed multi-nationals, Liz also enjoys working with purpose-led founders and organisations in relation to crafting capital wealth creation and business ownership succession approaches, throughout the hire to retire lifecycle, that are supportive of purposeful (including philanthropic) aims.    

Guest: Andra Ilie – Senior Adviser Family Office, Governance & Philanthropy, HSBC Private Banking EMEA

Andra advises on matters of Family Office, Governance and Philanthropy at HSBC Private Banking, working closely with international families, family businesses and individuals across EMEA. Andra has experience of working in two of the Big Four, as well as a single family office and an international luxury hospitality chain. Both a STEP Associate and ACA qualified, Andra has been listed in in Spear's Wealth Managers Index as one of the Top 10 Family Office Service advisers for four years in a row and has achieved the STEP Advanced Certificate in Family Business Advising and STEP Worldwide Certificate for the highest scoring paper.

Guest: Gabbi Stopp  - CEO of ShareGift

Gabbi Stopp is currently Chief Executive of the share donation charity and grantmaking foundation, ShareGift. In April she joins the Global Equity Organization as their Executive Director.  

She is passionate about the power and purpose of share ownership, and enjoys working with issuers, shareholders, philanthropists and charities. Prior to her role at ShareGift Gabbi ran ProShare for five years, and also enjoyed a lengthy career in executive and global employee share ownership both in-house at a number of FTSE100-listed plan issuers and at two service providers.

A chartered Company Secretary and lifelong learner, Gabbi is currently studying for a Masters in Philanthropy, Grantmaking & Social Investment. A glutton for punishment, Gabbi is training for her third marathon, in New York this November.

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Podcast
<![CDATA[Propertyshe podcast: Nick Walkley]]> https://www.mishcon.com/news/podcasts/propertyshe-podcast-nick-walkley https://www.mishcon.com/news/podcasts/propertyshe-podcast-nick-walkley feedback@mishcon.com (Mishcon De Reya) Fri, 08 Mar 2024 11:13:00 GMT Nick Walkley is Principal and UK President at global real estate advisory firm Avison Young. Prior to joining Avison Young in 2021, Nick was Chief Executive of Homes England, the UK Government’s land, development, and housing investor. He led the creation and growth of the new Agency, responsible for the management/delivery of a diverse portfolio including the affordable homes programme, new towns, urban brownfield schemes, support to SMEs and infrastructure funding.

He has served as Chief Executive of two London local authorities, with a focus on building high performing teams during periods of adversity and austerity, and as a seasoned leader, is passionate about fostering strong organisational culture driven by clear values.

In all his roles, Nick has championed the power of urban regeneration and public-private partnership to improve peoples’ everyday lives. An advocate for the dynamism and vitality of cities, Nick is a firm believer that the best way to get to know a city is through its restaurants, bars, and record stores.

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Podcast
<![CDATA[Women in Wealth: Asia Spotlight - Lorna Watson]]> https://www.mishcon.com/news/women-in-wealth-asia-spotlight-lorna-watson https://www.mishcon.com/news/women-in-wealth-asia-spotlight-lorna-watson feedback@mishcon.com (Mishcon De Reya) Fri, 08 Mar 2024 10:44:00 GMT Lorna Watson is the Founder of STELAR, a purpose-led accessories brand born and established in Bali, that works alongside local artisan communities to create luxury handcrafted accessories that preserve high-level heritage weaving skills.

Previously, Lorna spent 25 years in the luxury goods industry, directing the creative vision and development of collections for numerous international brands, including Dior, De Beers, Burberry and Astley Clarke.

Having witnessed the environmental and ethical impact the industry has been grappling with first hand, she was driven to create a brand that inspires a new way of thinking, a new way of connecting people and a more responsible way to do business.

An early adopter to a conscious lifestyle, Lorna’s mission has been to make a significant step-change within the industry and the lives of the people she is working with, ‘making less, making it better and making it more meaningfully’.

What woman (real or fictional) inspires you?

I discovered the work of Jane Goodall when I was 11 years old, and as a result became fascinated by ethnology and conservation. Throughout my teenage years, my treasured pocket money was spent on 'Save the Whales' and other similar causes that supported the protection of endangered species and our precious natural environment.

Through her revolutionary research on chimpanzees, Jane Goodall has become a world leader in conservation and positive impact, building a better, more sustainable world through community based programmes, and proving that real change is possible when we work together.

I went on to study a degree in Applied Arts, with cultural and skills preservation remaining a constant throughout my career. I wrote my thesis on the role of indigenous culture and craftsmanship in sustainable communities and environments, followed by a 25 year career path that was focused on the value of high level craft skills. It’s incredible to reflect on how various channels of my studies and career path reached a confluence that  led me to founding STELAR, which is built on the principles of community, craftsmanship, transparency and regeneration. 

Studies have shown that 80% of women do not feel comfortable discussing finances with family and friends. Is this true in your experience?

Historically, it has been challenging for women to openly discuss finances, as we have had to navigate a great deal of prejudice and conditioning. This was certainly my personal experience throughout my early and mid stage career where it wasn’t uncommon to discover that we were subject to unequal pay, and were often faced with a glass ceiling professionally. To a lesser extent this has been the case for me with family and friends, as we tend to approach difficult conversations with more openness, and recognise the importance of believing in our own value and contribution. Recognising my true value as an individual has proven to be an important starting point for me, no matter how sensitive the subject may be.

What is the biggest risk you have taken?

Leaving my corporate job as Creative Director for a successful jewellery brand in London to found an artisan led business, on the other side of the world. I relocated to Bali after only six months research, built on the early stage success of a small sample collection I had created in collaboration with an artisan community in East Bali, in order to test the response within an international market context.

The collection sold out in London in the first month so the early signs were pretty encouraging. Simultaneously, I had reached a crossroads where my career was no longer aligned with my personal values and I felt very clearly led to start something purposeful. At that time, however, 'sustainability' and regeneration were not the recognised subjects in the industry that they are today and I was frequently met with blank faces by many of my contacts when I explained what the mission of our the business was. Fast tracking to today, that seems like a life time ago and was certainly a risk worth taking.

Have you ever felt imposter syndrome? If so, how have you dealt with this?

Indeed. In the very early stages of research for STELAR, I expected this business would be based on handcrafted jewellery, because that's where my career expertise lay, and this is what I initially started to explore with the artisan community I began to research and sample with.

However, due to the materiality and skillsets of the community I was working with, I was very quickly led to create larger forms, which evolved into handbags. When I returned to London six months later to present our sample collection of sustainably and responsibly made handbags to a series of buyers and agents there, I found myself faced with the fear that no-one would take me seriously.

Whenever I find myself in this position now, where I doubt what I am doing, or whether I am capable of what I have set out or do, I bring myself back to the 'why', and the reason that STELAR exists. I refer to this as ‘my inner compass’, which I apply to most, if not all, avenues of my life now and it really helps me to stay aligned with my mission and values.

What achievement or experience are you most proud of?

Taking the leap to start STELAR, and to keep going in the face of adversity. In the words of Jane Goodall, "What you do makes a difference, and you have to decide what kind of difference you want to make."

Setting up and running a business presents constant challenges and requires endless determination and resilience. I'm proud that we have remained agile as a team, and been able to re-evaluate and respond quickly when plans haven't taken shape the way we expected. I'm also proud of our expanding artisan community - each craftsperson that we collaborate with, that shares our objectives, and has believed in our mission from the outset, and of the dedicated team we have built on the ground in Bali who continue to support our growth and evolution.

There's a lot of joy in what we achieve collectively, and you can see and feel that in the products we create and on the faces of each and every person we are collaborating with. That's something we are all proud of.

What is a cause that you are passionate about?

The over-riding mission of STELAR, which is to set new industry standards through transparent and responsible business practices, while preserving heritage skills within communities, not factories, and bringing value and recognition to the craftspeople and skills behind everything we create.

What advice would you give to your 12 year old self?

I was a pretty fearless and ambitious 12 year old, and I often reflect back on that age and how infallible I felt. One of my favourite books was Le Petite Prince, by Antoine de Saint Exubery. As a result I grew up believing that my wildest dreams weren't so wild after all. The Little Prince also believed that wisdom comes through open-mindedness and a curiosity to explore the world around us and within ourselves, so I would advise myself to keep believing in my dreams.

What are you most looking forward to in 2024?

Measuring impact.

We are currently undergoing B Corp Certification which is a rigorous assessment that sets the highest standards of transparency, accountability, and social and environmental responsibility.

The process is very holistic and insightful for us as a team as well as a business as it highlights the structures and metrics we need to implement in order to measure our true impact in communities and beyond.

I'm particularly excited about this because it has introduced a deeper layer of purpose and meaning to each of our respective roles within the team, as well as the impact we are creating with artisans as individuals, and within their community. This reaches beyond the skills we are preserving and will provide us with the opportunity to gain a greater understanding of additional layers of impact within other community initiatives such as education and healthcare.

Our impact defines us a business based on so much more than just profits, and this is our purpose.

 

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<![CDATA[Design rights and 'lookalikes': Court of Appeal confirms infringement by Aldi of M&S festive gin bottle]]> https://www.mishcon.com/news/design-rights-and-lookalikes-court-of-appeal-confirms-infringement-by-aldi-of-mands-festive-gin-bottle https://www.mishcon.com/news/design-rights-and-lookalikes-court-of-appeal-confirms-infringement-by-aldi-of-mands-festive-gin-bottle feedback@mishcon.com (Mishcon De Reya) Fri, 08 Mar 2024 09:32:00 GMT The Court of Appeal has dismissed Aldi's appeal against 2023's IPEC judgment, which found that Aldi had infringed four of Marks & Spencer's UK design registrations for its wintry-themed liqueur bottle. In dismissing Aldi's appeal, the Court of Appeal has provided guidance on some aspects of the test for design infringement, including the applicability in infringement proceedings of the 12-month grace period in the UK (and EU) that designers are permitted between disclosing their designs and applying to register them. In particular, the decision confirms that the grace period applies not just when assessing the overall impression of a registered design in the context of its validity, but also when that design is asserted in infringement proceedings.

The decision underscores the value of obtaining registered design protection for novel products, particularly to give an effective tool for rightsholders to tackle 'lookalike' products.

This decision can be can be contrasted with the recent High Court decision (as discussed here) that a trade mark protecting the get-up of Thatchers Cloudy Lemon Cider drink was not infringed by Aldi's lookalike Taurus Cloudy Cider Lemon drinks.

Background and IPEC judgment

M&S issued proceedings in 2021 following Aldi's release of a 'lookalike' clementine and blackberry-flavoured gin-based liqueur, arguing that Aldi had infringed four of its UK design registrations covering M&S's 'Snow Globe' gin. Before applying to register the registered designs, M&S had released a number of other 'iterations' of the same product, as part of a 'Gin Globes Project'. The design registrations were filed on 29 April 2021, and claimed a priority date of 15 December 2020.

Both sets of products depict a wintry forest design, with gold flakes which disperse when the bottle is shaken, as well as an LED light at the base of the bottle which, when lit, illuminates the bottle. A comparison of two of M&S' design registrations and Aldi's gin-based liqueur appears as follows in the IPEC judgment:

IPEC judgment

In January 2023, the Intellectual Property Enterprise Court (IPEC) found that Aldi's gin liqueur bottle infringed M&S's registrations. Given a number of common features including the snow effect, integrated light and wintry-design, Aldi's product did not "produce a different overall impression" sufficient to avoid infringement.

The differences relied on by Aldi were found to be minor in comparison to the common features, which the Court found to be cumulatively striking.

Pivotal to the IPEC judgment was a finding that all but one of M&S's earlier versions of its 'snow globe' should not form part of the design corpus when assessing infringement, because those designs were disclosed within the twelve month grace period before the registrations' priority date of 15 December 2020. There was one 'snow globe' iteration that pre-dated the grace period, but it did not display all the striking features of the registrations (in particular, it had no light-up feature). We discussed the IPEC judgment here.

Court of Appeal Judgment

Grace period and date of infringement assessment

On appeal, Aldi argued that the grace period applies only to the validity of a design registration, and should be ignored in assessing infringement. If Aldi had succeeded on this point, then all disclosures by M&S during the grace period would have formed part of the design corpus when considering the overall impression created by its design.

The Court of Appeal rejected this, holding that a registered design can only create one overall impression, whether considering validity or infringement. It stated that, if the grace period did not apply in an infringement context, a designer's own disclosures during the grace period, although not necessarily rendering the design registration invalid, would reduce its scope of protection "potentially to nil", meaning the designer would obtain a registration it could not use.

A finding that it applied to both validity and infringement was, however, sufficient to allow the grace period to fulfil its purpose of allowing a designer to test its design (which often includes multiple versions) in the market before deciding whether to invest in a registration (as M&S did).

However, the Court of Appeal also said that not all of a designer's disclosures during the grace period will automatically be excluded from the "prior art" corpus when assessing infringement – only those that do not create a different overall impression to the design that was registered. Therefore, a designer's earlier designs which are are disclosed during the grace period, but which are distinct from the registered design, may form part of the design corpus in an assessment of infringement of the registered design.

Other issues

The Court of Appeal also held (overruling the IPEC judge) that, when considering what a registered design protects, it is permissible for the court to look at the products manufactured to that design, in order to resolve any ambiguity. There was further disagreement between M&S and Aldi over whether the design registrations showed a light inside the bottle; after inspecting the registrations, the Court agreed with M&S that the LED light was indeed a feature of the registrations (shown above).

It also held that, whilst the law makes clear that the product indication should not affect the scope of protection of the design "as such", product indications can in certain circumstances be used to resolve ambiguities in design interpretation when looking at the images alone.

Comment

The decision is important in the following respects:

  • It clarifies that, when considering whether a product infringes a design registration, the assessment of the design's overall impression (and thus the breadth of its protection) is to be made as at the design's priority date (where the registration claims priority). Any disclosures of designs between the priority date and the filing date which produce the same overall impression as the registered design are to be ignored.
  • It is permissible when ascertaining what a design registration protects, to look at the products manufactured to that design, in order to resolve ambiguities.

Importantly, the decision means that designers can use the grace period to test their designs in the market, including versions and iterations of those designs, without fear of reducing the scope of protection of the design that they may choose to register, provided they produce the same overall impression.

The outcome in this designs case can be contrasted with the recent Thatchers judgment (see our commentary here), where Aldi successfully defended trade mark infringement and passing off proceedings brought by Thatchers in respect of Aldi's 'lookalike' cloudy lemon cider product. Design registrations can be very useful in protecting novel products, in fields where designer freedom is very wide. The fact that it is often easier to establish design infringement than it is for trade marks (there is no need to show, for example, a likelihood of confusion) or to prove passing off (which requires a misrepresentation to have been made), makes registered designs an effective weapon in the fight against 'lookalikes', as part of a wider brand protection strategy.

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<![CDATA[Amazon loses trademark appeal in Supreme Court over targeting UK shoppers: Cassandra Hill comments]]> https://www.mishcon.com/news/amazon-loses-trademark-appeal-in-supreme-court-over-targeting-uk-shoppers-cassandra-hill-comments https://www.mishcon.com/news/amazon-loses-trademark-appeal-in-supreme-court-over-targeting-uk-shoppers-cassandra-hill-comments feedback@mishcon.com (Mishcon De Reya) Thu, 07 Mar 2024 14:07:00 GMT Cassandra Hill, Partner and Head of IP Enforcement at Mishcon de Reya, has provided her thoughts on the news that Amazon has lost an appeal against a ruling that it had infringed UK trademarks by targeting British consumers on its US website. The ruling is a potentially important judgment for ecommerce platforms operating internationally.

She commented: "The Supreme Court's ruling has provided clear direction on what amounts to 'targeting' within the context of advertisements and offers for sale of goods on a retail website and when this will amount to trade mark infringement in the UK in cross-border internet sales.  This is welcome news for brand owners and licensees who operate their business on a licensing basis to ensure that they can enforce against any encroachment on their operational territories.

"In its judgment, the Supreme Court unanimously dismissed Amazon's appeal and determined that the promotional content and sales offers complained of on Amazon's US website targeted UK consumers and therefore constituted the use of Lifestyle Equities' trade marks within the UK (and the EU), thereby infringing those marks. Despite the website's .com domain and its apparent US focus, the Court found that the offers were targeted at the UK market. This was evidenced by several factors: the messages on the landing and subsequent pages offering to deliver the goods to the UK, specifying which of the goods could be shipped to the UK and a 'review your order' page which offered to sell goods to a consumer with a UK address, with UK delivery times and the option to pay in GBP. Although prices and shipping costs were default displayed in US dollars on Amazon's website, the Court concluded that the advertisements and search page results were clearly informing UK consumers that Amazon would facilitate the shipping of the items to the UK.

"The Supreme Court refused to opine on whether products would infringe if they were sold and delivered into the UK where there had been no targeted advertising and offers for sale as it did not arise in the circumstances of this case and they said that the case law on this point (the CJEU decision in Blomqvist v Rolex) did not provide a sufficiently detailed description of the underlying facts for the Supreme Court to form a reliable view (despite the Court of Appeal having found that products in this scenario would infringe). This may therefore be an issue to be resolved in a future case."

Related coverage:

Global Legal Post
Commercial Dispute Resolution

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<![CDATA[First conviction for cyberflashing under the Online Safety Act]]> https://www.mishcon.com/news/first-conviction-for-cyberflashing-under-the-online-safety-act https://www.mishcon.com/news/first-conviction-for-cyberflashing-under-the-online-safety-act feedback@mishcon.com (Mishcon De Reya) Thu, 07 Mar 2024 13:52:00 GMT The first person has been convicted of cyberflashing just weeks after the new provisions came into force as part of the Online Safety Act 2023 (the "Act"). Nicholas Hawkes, who had already been given a community order and was a registered sex offender for sexual activity, admitted to two counts of cyberflashing, was remanded in custody and is due to be sentenced for the offences, as well as breaching his community order on 11 March 2024.

Since 31 January 2024, under the Act, it has been an offence to send a photograph or film of genitals to another person with the intention to cause alarm, distress or humiliation, or for the purpose of obtaining sexual gratification (Section 287, to be inserted as Section 66A into the Sexual Offences Act 2003). This includes sending by any electronic means, showing it to another person or placing it for another person to find. Cyberflashing, which is particularly prevalent on dating apps, AirDrop and other platforms, is an either way offence and is punishable by up to two years in jail.

The Act, heralded by the Government as being "world-leading", was brought in to "make the UK the safest place in the world to be online." While it gained Royal Assent on 26 October 2023, with some parts already in force, other parts are set to do so over the coming months in line with Ofcom's roadmap to regulation. In addition to the regulatory duties placed on service providers and social media platforms, the Act has created a host of new offences which are designed to "apply directly to the individuals sending threatening or menacing messages and bring justice directly to them".

As well as cyberflashing, these offences include:

  • "revenge porn" (also known as image-based sexual abuse), in criminalising the sharing of, or threatening to share, an intimate photograph or film;
  • "epilepsy-trolling", i.e. sending or showing flashing images electronically;
  • sending threatening messages;
  • sending fake news that aims to cause non-trivial physical or psychological harm; and
  • encouraging or assisting serious self-harm.

Under the Sexual Offences (Amendment) Act 1992, victims of cyberflashing and image-based abuse receive lifelong anonymity from the point at which the offence is reported.

Sefer Mani, from the East of England CPS, remarked that: “Cyberflashing is a grotesque crime and the fact we were able to deliver swift justice for the two victims shows the new law is working. Everyone should feel safe wherever they are and not be subjected to receiving unwanted sexual images."

Hawkes' swift conviction signals a clear effort to show that the Act will effectively punish individuals who deliberately target other individuals online. 

More recently, Karn Statham has been convicted for sending several threatening and malicious messages to a woman and intimidating her with visits to her address multiple times, after being asked to leave her alone. The threats escalated on 16 February 2024 and continued over the weekend. Statham was sentenced to 34 weeks in prison, ordered to pay £200 compensation for damage caused, and given an 18-month restraining order.

We will continue to monitor the impact of the Act, and whether further convictions will follow. There remains concern that it will be difficult and distressing for victims to secure cyberflashing convictions given the requirement to prove specific intent, unlike in relation to sharing intimate images, where the law has been strengthened and there is no longer a need to prove intent to cause harm.

What next?

Ofcom has already started work on the three phases of implementation, which involves consulting on and publishing codes of practice and guidance in relation to illegal harms duties by Q4 2024 – Q1 2025. Phase 2 will address the Act’s children’s safety duties, which are focused on protecting children (under the age of 18) from harmful (but legal) content, including pornography and content relating to suicide, self-harm and eating disorders. Finally, phase 3 will focus on an additional set of heightened online safety duties relating to transparency reporting, user empowerment, fraudulent advertising, and user rights.

Keep up to date with developments on the Act at our Online Safety Act hub.

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<![CDATA[Families in Business Series: Key points to consider when transitioning into a family business]]> https://www.mishcon.com/news/families-in-business-series-key-points-to-consider-when-transitioning-into-a-family-business https://www.mishcon.com/news/families-in-business-series-key-points-to-consider-when-transitioning-into-a-family-business feedback@mishcon.com (Mishcon De Reya) Thu, 07 Mar 2024 11:14:00 GMT Transitioning to a family business – key considerations

Once your business is established and whether you are already family members working together or a founder wishing to involve other family members, it may be time to formalise and adjust business arrangements. As a business develops and grows, then so do the founder(s) and their family. You may not be retiring or transitioning to the next generation yet, but we recommend establishing sound governance early, while the business is still relatively young and the family group relatively small. This can help avoid and manage conflicts and issues in future.

How to get started – mapping and protecting relationships

Professional relationships are key to the success of any business, but this analysis becomes more complex when looking at families in business. The key starting point is to map what relationships already exist and their natures – who are the main stakeholders of the business?  This may depend on the form the business takes already – is it a partnership or corporate for example? Who performs the key roles and where are the assets required for the business held? In the case of a company, who are the businesses suppliers, customers, employees, shareholders and directors – and which of these positions are held by family members? Do any family members hold key assets used by the business such as IP or property? This analysis can highlight any potential conflicts of interest which may need to be managed or addressed early. It can also help the business assess if the business is benefitting from sufficient diversity of skills to tackle current and future challenges or whether external input is needed. It is common at this stage for a business or the family to seek additional external advice or appoint one or more non-executive directors.

A family mission and corporate purpose

Many family businesses have a well-defined corporate purpose (a statement of the value brought by the business to society) accompanied by a set of core behavioural values.  Having a sound and 'lived' statement of purpose and core values can give the competitive edge by attracting and engendering loyalty in customers, financiers, and employees. In family backed businesses, a family will often also take time to coalesce around a defined set of family values or mission statements to underpin their behaviours and objectives (and those of the business). Important considerations include how far the wider family backs the business and its purpose and the family's attitude to sustainability, as well as their guiding principles for dealing with each other.

Setting appropriate family and business governance structures

The next step is to outline how family decisions and (separately) business decisions will be taken and what controls the family will have in relation to the business. Sound communication channels should be established between the two. The choice of family governance processes will depend on the size of the business, the number of family members, and the degree of involvement of family members in the business. Larger families often have a family constitution or charter setting out family's values/mission statement; role of any family institutions; the relationship with the governing body of the business (e.g. it's board of directors) and policies regarding important family issues in relation to the business. These may include employment policies with respect to family members, restrictions on transfers of shares, and a succession policy with respect to the CEO. Family 'institutions' may comprise a family assembly meeting only once or twice annually, whilst a 'council' may be formed of those family members who take decisions of behalf of the family in relation to the business and be tasked with ensuring sound communication with the assembly.

On the business side, it is also important to establish a sound constitution and strong governance disciplines. Corporate documentation should ensure ownership rights are protected and that appropriate board structures are established. There may be benefits to having non-family members on the board in executive or non-executive positions to bring in additional skills and contacts. Often, of course, at an early stage of transition, a founder or key founding members may still be in control. In that case, establishing a robust scheme of delegation of decisions – indicating the threshold for decision making below which founder consent is not required, can be helpful to ensure smooth running of the day-to-day business. Early thought should also be given to transition and what could happen in the event of illness or a founder(s) passing away and what should happen at retirement age.

When it comes to family members working in the business, clear and transparent employment and remuneration policies should ensure there is alignment between family and non-family employees – it must be clear that merit and professionalism count.

Documenting the arrangements

We would recommend recording these points in the governing documents of the family business. It may be your best opportunity to address them now, while the business vision and intentions are clearest. The key documents - if your business is run as a company - will be the shareholders' agreement, the articles of association and employment/service agreements. As noted above, a family charter/constitution can be a useful addition for the family business. Whilst generally not legally binding, the charter provides a clear statement of intentions providing an ideal place to enshrine items that are difficult to otherwise construe as legal obligations. If your business is run as a partnership, then now may be the time to incorporate it. We have helped clients incorporate businesses that were previously run as general partnerships, to benefit from the protection of limited liability, an easily transferable share structure and customisable share rights. As well as considering the particular entity type, it may also be appropriate to consider moving elements of the existing business outside of the main corporate structure, perhaps because one family member is ideally suited to running a particular part of the existing business but would not suit the wider operation. Alternatively, you may be wise to bring into the business key assets currently owned outside of it.

How we can help

Our Family Businesses team have extensive experience advising family businesseshave extensive experience advising family businesses at all points in their lifecycle, including through the process of transition to the next generation.

We can assist with reviewing existing governance arrangements and ensuring that that are fit for purpose, providing stewardship and governance training to existing and incoming family management, and acting on your behalf as an intermediary in the context of discussions regarding the future of your business.

We are also well experienced in advising on corporate and business restructurings, including with respect to the tax.

Contact us

We hope this article and our series of families in business articles provide you with valuable insights on how you can successfully manage your growing family business. If you have any questions or need further assistance, please contact us.

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<![CDATA[Spring Budget: what it means for Family law]]> https://www.mishcon.com/news/spring-budget-what-it-means-for-family-law https://www.mishcon.com/news/spring-budget-what-it-means-for-family-law feedback@mishcon.com (Mishcon De Reya) Thu, 07 Mar 2024 10:47:00 GMT As part of the 2024 Spring Budget Jeremy Hunt has announced a commitment of £170 million to deliver a "justice system fit for the modern era". £55 million of this has been allocated to the Family Courts to offer "online targeted guidance and earlier legal advice, shortening wait times and supporting families through non-court dispute resolution".

Following the Government's conclusion not to implement compulsory mediation in family law proceedings (after its earlier consultation on the topic in the summer of 2023), the Government instead announced plans to introduce a 'legal advice pilot'. These plans have now come to fruition in the Spring 2024 budget in the form of the 'Early Legal Advice Pilot'. This scheme will see £12 million of the overall sum allocated to the Family Courts by the budget invested in expanding the scope of Legal Aid to encompass early legal advice in private family law proceedings for parties considering an application to the Court for child arrangements.

Likewise, the Government has published plans to introduce a 'One Stop Shop', a 'new online information and guidance tool' which will aim to encourage earlier resolution of family disputes and promote the use of non-court remedies by educating families on the various options available to them. It is hoped by many in the Family Justice system that this will help parties develop a clear understanding of the approach of courts and the various routes to settlement they can take, thus improving the chances of successful mediation.

While the announcement that the Government will extend Legal Aid to support early legal advice in private law children cases is to be welcomed, it remains to be seen whether this relatively limited Legal Aid provision, alongside a raft of self-help focussed educational resources, will have a tangible positive effect on court waiting times and the Family Justice system as a whole.

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<![CDATA[Online Safety Act reforms tackling intimate image abuse and "revenge porn" come into force]]> https://www.mishcon.com/news/online-safety-act-reforms-tackling-intimate-image-abuse-and-revenge-porn-come-into-force https://www.mishcon.com/news/online-safety-act-reforms-tackling-intimate-image-abuse-and-revenge-porn-come-into-force feedback@mishcon.com (Mishcon De Reya) Thu, 07 Mar 2024 09:58:00 GMT As of 31 January 2024, new provisions within the Online Safety Act are in force to tackle intimate image abuse and "revenge porn". Where previously victims had recourse to a patchwork of civil and criminal causes of action, the various offences - including some new offences - have now been consolidated and become more effective tools for victims seeking justice. In particular, the Act creates a new base offence, within the Sexual Offences Act 2003, of sharing intimate images without consent, which removes the need to prove an intention to cause distress, which had been an unnecessary hurdle to clear for victims. It also targets "deepfakes" and introduces a new "cyberflashing" offence. The key changes are outlined below.

Tackling "cyberflashing" and "deepfakes"
  • Section 187 of the Online Safety Act introduces for the first time a new offence of "cyberflashing" (to be inserted as Section 66A into the Sexual Offences Act 2003) which criminalises intentionally sending or giving an image (photo or film) of a person's genitals (including your own) to another, intending to cause the recipient alarm, distress or humiliation, or for sexual gratification and being reckless to whether it caused the recipient alarm, distress, or humiliation.
  • This offence includes images which have been altered by computer graphics, aimed at tackling "deepfakes", i.e. fake non-consensual intimate or sexually explicit images that have been created using AI/computer software. Such images were not covered by the "revenge porn" offence, Section 33 of the Criminal Justice and Courts Act 2015 and other related offences (now repealed – see below).
New intimate image sharing offences
  • Section 188 has created a new base offence of sharing intimate images without consent (to be inserted as Section 66B(1) into the Sexual Offences Act 2003). This criminalises conduct where a person intentionally shares an image of or appearing to show another person in an intimate state, where the person in the image does not consent, and the perpetrator does not reasonably believe that the person in the image consents.
  • In addition to the base offence, two further serious offences have been created which carry greater maximum penalties than the base offence: (1) where the perpetrator commits the offence with the intention of causing the person in the image alarm, distress or humiliation; and (2) where the perpetrator obtains sexual gratification (to be inserted as Sections 66B(2) & (3) into the Sexual Offences Act 2003).
  • It is also an offence to threaten to share an image of a person in an intimate state where the perpetrator either: (a) intends that the victim or another person who knows the victim will fear that the threat will be carried out; or (b) is reckless as to whether the victim or another person who knows the victim will fear that the threat will be carried out (to be inserted as Section 66B(4)). The Act makes clear that it is not necessary to prove that an image actually exists, or that it shows a person in an intimate state if it does exist.
  • These offences are also intended to address activities including "deepfakes" and "downblousing", as noted by CPS guidance.
Repeal of previous "revenge porn" offences
  • Section 190 of the Online Safety Act repeals Sections 33-35 of the Criminal Justice and Courts Act 2015 which was the legislation first introduced to tackle "revenge porn" offences. It is important to note that this legislation still applies to conduct that occurred between 13 April 2015 and 30 January 2024.
Anonymity 
  • By virtue of the new offences being inserted into the Sexual Offences Act 2003, victims of the offences outlined above are entitled to automatic lifelong anonymity (under s2(1)(da) of the Sexual Offences (Amendment) Act 1992). This significantly strengthens protections for victims as this was not the case under previous legislation tackling intimate image and "revenge porn" offences.
Sexual Harm Prevention Orders and Sex Offenders Register
  • These new offences fall within the scope of Sexual Harm Prevention Orders, whereby the Courts can place restrictions on a person's behaviour to protect the public from sexual harm. The new offences also attract sexual offender notification requirements (dependent on factors such as the severity of the sentence and age of the perpetrator), whereby certain sexual offenders are placed on the sex offenders register (see Section 191(3) of the Online Safety Act 2023, Section 80 of the Sexual Offences Act 2003 and Schedule 3).

Analysis

As of November 2022, around 1 in 14 adults in England and Wales had experienced a threat to share intimate images, with the police recording over 28,000 reports of disclosing private sexual images without consent between April 2015 and December 2021. The Revenge Porn Helpline reported a three-fold increase in phone calls over 2022, whilst data published by Refuge revealed that the charging rates remained low.

These long overdue reforms aim to reverse that trend, against a backdrop of rapidly evolving technology, particularly the potential for AI to create manipulated images, of which the recent deepfakes of Taylor Swift are only one, high-profile example. The Online Safety Act was designed as a framework statue that could be regularly and easily updated. By using it as a vehicle for change in this area, it is hoped that the law will now, and in future, be more robust in addressing these significant online harms, which disproportionately impact women and girls.

The SPITE Project

The Queen Mary Legal Advice Centre (QMLAC) set up and runs the SPITE project (Sharing and Publishing Images to Embarrass), which provides free legal advice to victims of sexual image-based abuse. Mishcon de Reya are proud to have worked with the QMLAC on this important project since its inception in 2015.

Prior to implementation of the Online Safety Act, Mishcon de Reya and the QMLAC made joint submissions to the Public Bill Committee on the Online Safety Bill on behalf of victims of sexual image-based abuse. Mishcon de Reya also made recommendations to the Law Commission to strengthen the law in this area to protect victims.

Mishcon de Reya's specialist team of lawyers advise clients that have been victims of digital/online abuse and harassment, as well as publishers and platforms on their complex obligations in moderating online content.

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<![CDATA[Non-dom no more? What do the Spring Budget's announcements mean for the UK taxation of non-UK domiciliaries?]]> https://www.mishcon.com/news/non-dom-no-more-what-do-the-spring-budgets-announcements-mean-for-the-uk-taxation-of-non-uk-domiciliaries https://www.mishcon.com/news/non-dom-no-more-what-do-the-spring-budgets-announcements-mean-for-the-uk-taxation-of-non-uk-domiciliaries feedback@mishcon.com (Mishcon De Reya) Thu, 07 Mar 2024 09:41:00 GMT The Spring Budget 2024 announcements propose huge changes to the taxation of non-UK domiciled individuals (or "non-doms") living in the UK. Labour have long been proposing to reform the current regime should they win the upcoming general election, but the Chancellor beat them to it in a move which was largely unexpected until a few days ago.

As yet, the only detail we have of the changes is in HM Treasury's technical note, and we await draft legislation to fully understand the proposals. Some of the measures are subject to consultation. The changes will largely take effect from April 2025 and the next general election must take place by January 2025 at the latest (with many suggesting Autumn 2024 as the likely date, or even May 2024). So – based on current polling – it is likely the Conservatives will no longer be in power by the time their announcements take effect. Given Labour's stated views on restricting non-dom status, however, it seems unlikely they would revoke or substantially amend the proposals.

Foreign (i.e. non-UK) income and gains ("FIG")

Non-doms moving to the UK

From 6 April 2025, the remittance basis of taxation will be abolished. Instead, an individual in their first 4 years of UK tax residence (after at least 10 years of non-UK residence) will be able to elect not to pay UK tax on their FIG. There will be no restrictions on the ability to remit such FIG to the UK. Interestingly, the regime does not appear to be restricted to non-doms, so a UK domiciliary who has been non-UK resident for 10 years before returning to the UK could benefit from the rules for the first 4 years following their return. A minor disadvantage of opting to benefit from the exemption on FIG will be the loss of the personal allowance and CGT-exempt amount.

It appears that the 4-year period starts from the first year of UK residence regardless of any interruptions, so a person who is UK resident in year 1 then ceases UK residence for years 2 and 3 could claim the new regime in year 4, but not in years 5 or 6. The requirement for a 10-year period of non-UK residence in order to be eligible for the new regime could catch taxpayers who have ceased UK residence for the minimum periods necessary under current rules to 're-set' their deemed domiciled status (broadly 6 tax years) or to fall outside the temporary non-residence rules (broadly 5 calendar years).

Non-doms already in the UK

Non-doms who are already UK-resident will be eligible for the new rules if they are still within their first 4 years of UK residence. However a non-dom who commenced UK residence in or before 2021/22 will, from 6 April 2025, be subject to UK taxation on their worldwide FIG. Transitional provisions mean that for 1 year only (i.e. for 2025/26), persons who were eligible for the remittance basis but will not be eligible for the new 4-year regime will only be subject to UK tax on 50% of their foreign income (but not foreign capital gains).

For CGT purposes, personally held assets can be re-based to their 5 April 2019 value, provided the taxpayer remains non-UK domiciled and is not yet deemed domiciled at 5 April 2025.

For individuals who have claimed the remittance basis in previous years, there will be a temporary reduced 12% rate of tax on FIG remitted between 6 April 2025 and 5 April 2027. This provides an incentive to remit during those 2 years where it is known that the funds will be required in the UK. If, however, the taxpayer can meet their UK expenditure requirements from 'clean capital' or post-2025 taxed FIG, both of which can be remitted to the UK without triggering any (further) UK tax at all, it still makes sense to keep historic FIG outside the UK. It will be important to segregate pre-April 2025 FIG from post-April 2025 FIG to prevent unnecessary taxable remittances.

Application to trusts

Similar changes will be made to the taxation of FIG within trusts settled by non-doms. Currently, FIG within a 'protected settlement' settled by a non-dom to hold their non-UK assets before they become deemed domiciled and so cease to be eligible for the remittance basis of taxation, is not subject to UK tax on an arising basis, but only when a UK-resident beneficiary benefits from the trust. This protection will be abolished from 6 April 2025, including for trusts created before that date.

Instead, the FIG within such a trust will be taxed on a non-dom settlor "on the same basis as UK-domiciled settlors at present", unless the settlor is within the 4-year regime described above. UK resident and domiciled settlors are only subject to taxation on income and gains within a trust where that trust is 'settlor-interested'. In order to prevent a trust from being settlor-interested for both income tax and CGT purposes, it is necessary to exclude, amongst others, the settlor, their spouse, children and grandchildren – this will rarely be palatable. Existing protected settlements should therefore be reviewed in light of the new regime. In many cases, it may nonetheless prove desirable to retain a pre-existing settlement because of its grandfathered IHT status, as explained below, or for other estate planning reasons.

Insofar as UK-resident beneficiaries of pre-2025 protected settlements are concerned, they will continue to be subject to UK tax on benefits received from the trust by reference to pre-2025 FIG within the trust.  They will, however, no longer be able to claim the remittance basis on such sums. Trustees should consider making distributions before 6 April 2025 to UK-resident beneficiaries who are currently eligible for the remittance basis but who will not qualify for the 4-year rule if it is likely that the sum will not need to be remitted to the UK. UK resident beneficiaries eligible for the 4-year rule can receive trust benefits free of UK tax from 6 April 2025, regardless of whether that benefit is remitted to the UK. However, such benefits will not 'wash out' the FIG within the trust available to match against benefits provided to UK-resident beneficiaries who are not eligible for the 4-year rule.

Inheritance tax ("IHT")

The changes to inheritance tax remain subject to consultation, though are potentially equally wide-ranging.

It is proposed that exposure to IHT on personally held non-UK assets will cease to be determined by domicile status, instead moving to a residence-based system. It is envisaged that worldwide exposure to IHT would apply after 10 years of UK residence. In practice, given a non-dom who has been UK resident in 15 of the last 20 tax years is already subject to IHT on their worldwide assets, this will merely reduce the existing time limit for such individuals.

Conversely, it is proposed that worldwide exposure to IHT would cease after 10 years of non-UK residence. This would be a significant increase compared to the current 'tail' by which a UK deemed domiciled person ceasing UK residence can lose their worldwide IHT exposure from the start of their fourth year of non-UK residence.

The proposed new rules would potentially benefit UK-domiciled persons leaving the UK or who are already non-UK resident. It is notoriously difficult to lose a UK 'domicile of origin', such that a person originally from the UK may not cease to be UK-domiciled even after several decades of non-UK residence. In addition, the nature of the UK concept of domicile – which has evolved through case law over several centuries – means it can be notoriously difficult to determine where an internationally mobile person is domiciled or to pinpoint when their domicile status changes. The shift from a domicile-based system to a residence-based system will enable such persons to determine with absolute certainty their exposure to IHT, and may make it easier for UK domiciled persons to lose their worldwide IHT exposure.

The technical note states, however, that the consultation will include "consideration of further criteria such as other connecting factors", suggesting that the shift to a residence-based system may not be as simple as at first appears. Indeed, if a person's other connections to the UK - such as whether they have a UK home, where their family lives, where the majority of their assets are etc - were to become relevant to their IHT exposure, this could create just as much uncertainty under the new regime as under the current domicile-based regime.

It is also proposed that the IHT exposure of trusts will be reformed. Under current rules, any trust settled by a non-dom and which holds only non-UK assets is permanently sheltered from IHT, even if the non-dom settlor subsequently becomes UK-domiciled or deemed domiciled, and even if they may continue to benefit from those assets. It is proposed instead that such trusts will be subject to IHT if the settlor meets the residence criteria when an IHT charge might otherwise apply (such as on the settlor's death or on 10-year anniversaries). Importantly, any trust settled by a non-dom before 6 April 2025 will continue to benefit from permanent 'excluded property status', which creates an incentive for any non-dom who anticipates they may exceed the 10-year residency rule – whether immediately from 6 April 2025 or in the future – to settle a trust before April 2025. Going forwards, any trusts settled by family members who are both non-dom and non-UK resident may be particularly important planning vehicles where there are also UK-resident family members wishing to minimise their own IHT exposure.

Action points

So what should a UK-resident non-dom do now?

  1. Where possible, consider declaring dividends or realising capital gains on non-UK assets before 6 April 2025. Provided you are eligible for and claim the remittance basis of taxation and keep the sums outside the UK, these can be received free of UK tax.
  2. Defer making remittances of your pre-April 2025 FIG until after 5 April 2025 (but before 6 April 2027), in order to benefit from the reduced 12% rate of taxation, as opposed to up to 45% on income and 24% on capital gains.
  3. Make arrangements for your post-April 2025 FIG to be separated from your pre-April 2025 FIG on which you previously claimed the remittance basis, as remitting the latter will result in a UK tax charge whereas remitting the former will not, on the basis that it will have been taxed anyway.
  4. Review any protected settlements to determine whether it may be desirable to exclude the settlor, their spouse and potentially their children, grandchildren and each of their respective spouses from benefit before 6 April 2025 to avoid the settlor being subject to UK tax on FIG within the trust on an arising basis.
  5. Consider making trust distributions before 6 April 2025 to UK resident beneficiaries who are currently eligible for the remittance basis but who will not be eligible under the 4-year rule.
  6. Consider establishing a trust before 6 April 2025 to shelter your non-UK assets from IHT.

These announcements represent a complete reform of the UK taxation of non-doms (and indeed UK domiciliaries who are or have been non-UK resident), so all affected taxpayers should ensure they understand their future tax exposure. As always, there will be winners and losers from the new rules, but bespoke advice is the best way to ensure you are in the optimum position.

 

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