UK Current Business Law Developments

Speaking in July 2007 at the Annual General Meeting of the UK recording industry group, BPI, Tory party leader David Cameron expressed his support for the proposed extension of the copyright term for sound recordings from 50 years to 70.

Outlining his new policy on the creative industries and social responsibility, the Conservative leader, who was the meeting's keynote speaker, described the extension of the term of copyright from 50 years to 70 years for sound recordings as “good for musicians and consumers too”.

"A Conservative Government will argue for this in Europe, for this change to happen in order to protect investment in the future of the industry, reward our creative artists and generate more choice for consumers," stated Cameron.

He also highlighted the role that ISPs should play in combating copyright theft. Describing them as "the gatekeepers of the internet", he argued that illegal downloads were "clear and visible internet traffic" and "could be blocked by ISPs".

Noting the "massive fraud" carried out against the music industry every day, Cameron emphasised that "copyright theft has to be treated like other theft" and pledged that the Conservatives would enforce laws more strongly so that perpetrators are brought to book.

He added that the Conservatives would work with industry to "get the message out that piracy and illegal filesharing is wrong".

Also In July 2007, the UK Intellectual Property Office and the Japan Patent Office announced that a new initiative designed to speed up the processing of patent applications in the two countries, the Patent Prosecution Highway (PPH), had been launched.

The year-long pilot of the Patent Prosecution Highway scheme will allow patent applicants who have received an examination report by either the UK Intellectual Property Office (UK-IPO) or the Japan Patent Office (JPO) to request accelerated examination of a corresponding patent application filed in the other country.

The aim of the pilot is to test applicant demand for this additional option for speeding up examination of patent applications, and to quantify the quality and efficiency gains to be expected.

Ian Fletcher, Chief Executive of the UK Intellectual Property Office explained that:

"The Patent Prosecution Highway is a valuable additional resource for those seeking to protect their intellectual property in both the UK and Japan. I am especially pleased that the improved efficiency and quality expected to arise from the PPH is a direct result of the strong relations that exist between the UK Intellectual Property Office and the Japan Patent Office."

"The PPH will help the offices in their goal of stimulating and rewarding invention and innovation and is an important step towards a global patent prosecution highway network."

"The Patent Prosecution Highway is a significant step in the cooperative efforts of Japan and the UK to streamline patent prosecution and support Japanese and UK industries to acquire patents throughout the world."

"This initiative between the two countries is expected to further contribute to the realisation of a global patent prosecution highway network."

In a report published in May 2007, the House of Commons Culture, Media and Sport Select Committee recommended that the current copyright term for sound recordings of 50 years should be extended to 70 years.

This contradicted the findings of last year's Gowers review of the UK's intellectual property regime, which suggested that the economic benefit to performers of such an extension would be minimal.

"Copyright term for sound recordings should be extended to at least 70 years, to provide reasonable certainty that an artist will be able to derive benefit from a recording throughout his or her lifetime."

“We have not heard a convincing reason why a composer and his or her heirs should benefit from a term of copyright which extends for lifetime and beyond, but a performer should not”.

The Select Committee went on to suggest that the rejection of an extension to copyright term by Andrew Gowers in his Review of Intellectual Property, published in December 2006, failed to take account of the moral right of creators to choose to retain ownership and control of their own intellectual property, and instead examined the matter from a purely economic standpoint.

The Committee additionally called for new measures to help tackle piracy, setting out in statute deterrent levels of damages available in cases where copyright has been infringed, and making it illegal to camcord a film being shown in a cinema.

The Committee also concluded that the present statutory exemptions from infringement of copyright are not providing clarity or confidence for users or for the creative industries, particularly in relation to home copying, and it recommended that the Government should draw up a new exemption permitting copying within domestic premises for domestic use (including portable devices such as MP3 players, and vehicles owned or used regularly by the household) but not onward transmission of copied material.

Noting the role of the internet and of social networking websites in distributing unlicensed creative material, the Committee called upon internet service providers and internet search-based businesses to do more to discourage piracy, and to take more responsibility for dealing with unlicensed material, for instance by establishing a proactive body to examine claims that unlicensed material is being made available.

The UK Patent Office confirmed that as of April 2, 2007it would change its name to the UK Intellectual Property Office.

Commenting on the move, Patent Office Chief Executive, Ron Marchant explained that:

"We have been called The Patent Office for many years. During this time, businesses built upon other forms of 'intellectual property', such as copyright, trade marks and designs, have often commented that the name does not reflect all our responsibilities. This has caused confusion over who is responsible for these other rights, and also how important we and the Government consider those rights to be."

"All forms of intellectual property are important for successful and competitive UK businesses. This is reflected in the range of recommendations made in the Gowers report."

"The report’s main recommendations will help us to enforce intellectual property rights, and support British businesses both at home and abroad. These are issues we began to deal with in our own reform programme, 'Patent Office for the 21st Century'. So it is even more appropriate that these matters will be included in our corporate plan when we become the UK Intellectual Property Office."

"A number of changes need to be made to the law, but this does not prevent us from using our new name. To avoid any doubt we will use the words 'UK Intellectual Property Office is an operating name of the Patent Office' on our material until the legal changes have been made."

In February 2007, the UK's Trade and Industry Minister, Malcolm Wicks confirmed that, from 6 April, new powers under the Copyright, Designs and Patents Act, backed up with GBP5m new funding, would be at the disposal of Trading Standards Officers and other UK enforcement agencies.

"The UK film, music and game industries are among the most creative and innovative in the world, but peddlers of counterfeits are costing those industries up to GBP9 billion a year. The taxpayer is also losing out to the tune of GBP300 million. It's a serious offence, whether committed by small-scale hawkers or international crime organisations."

"From 6 April, there’ll be an additional 4,500 pairs of Trading Standards eyes watching counterfeiters and pirates. This will mean more surprise raids at markets and boot sales, more intelligence, more prosecutions and more criminals locked up. IP criminals should know that the UK is not a safe place. Their risk of 10 years' imprisonment and unlimited fines is very real and from this date forward a markedly higher risk."

The UK Patent Office (now the UK Intellectial Property Office) announced in December, 2006, that it was seeking the views of businesses on rules which will bring into effect the new regime for examination of trade marks on relative grounds.

Earlier that year the Patent Office consulted on how, in the future, the relative grounds for refusal contained in the Trade Marks Act 1994 should be dealt with. After taking into account the views expressed in response to the consultation it then published a decision on how it should proceed.

Under the proposed new regime, the Registrar of Trade Marks will no longer refuse to register a new trade mark application in the face of an earlier conflicting trade mark unless the owner of the earlier mark successfully opposes the new application.

The Registrar’s examiners would, nevertheless, still conduct a search as part of the examination process and would inform both the applicant for registration of the results of the search and also the owners of earlier conflicting trade marks identified in it if, and when, the application proceeds to publication.

The Patent Office explained that: "Having decided what the policy should be, consideration has now been given to the legislative changes that are required to bring this policy into practice. This consultation document therefore sets out draft legislation to show how the new regime will operate."

Responding to the publication in December, 2006, of the Gowers Review of Intellectual Property, Ron Marchant, Chief Executive and Comptroller General at the UK Patent Office praised the job done by the former Financial Times editor.

Mr Marchant stated that: "The Patent Office joins others in welcoming the Report and I look forward to the Patent Office playing a full role in implementing the recommendations for which it is responsible. Andrew Gowers and his team have done a comprehensive and thorough job in a very open-minded way. We congratulate them."

"The Report has confirmed the crucial importance of IP to the success of the UK in the global knowledge economy and we are pleased that the report sees the system as operating broadly satisfactorily. We are very pleased that the report recognises the important role played by the Patent Office and supports our own programme "Patent Office for the 21st Century", identifying the programme as an appropriate vehicle for some of the recommendations."

In particular, he announced that the Patent Office will be revising its role in the following areas:

The Patent Office chief concluded: "Thanks to the work we began with our Patent Office for the 21st Century programme we are ready to rise to the challenge. That challenge is highlighted by the proposed change of name to the UK Intellectual Property Office as this will signal to all customers and stakeholders the true range of our activities and contribution. I am delighted that the Patent Office for the 21st Century will be "The UK Intellectual Property Office"."

In May 2007, accounting firm, KMPG suggested that the failure of direct and indirect tax regimes to proactively address the seismic shifts taking place in the media sector may be discouraging development in this critically important arm of the EU economy.

David Nickson, Media Tax Partner for KPMG in the UK suggested that: “For companies on the cutting edge of developing and delivering digitised products and services, particularly those fuelling the growth in internet businesses, it is becoming increasingly difficult to align these new ways of doing business with international tax principles."

“The challenges presented to national tax laws are principally those of intangible borders. The immediate reaction from fiscal authorities to the changing environment has been to try to counter the potential for tax leakage, however, it would be wrong to focus solely on the potential for tax loss, as taxpayers simply seeking to meet their obligations will find it increasingly difficult to do so when tax systems fail to proactively address the way profits are generated in the online world.”

“In addition, by shoehorning new forms of economic activity into existing tax frameworks, there is a serious risk that governments’ underlying objectives, such as stimulating business activity and consumer spending in certain sectors could be inhibited.”

Amanda Tickel, Indirect Tax Partner with KPMG in the UK added: “The 2003 changes for VAT in Europe are a good example – at the same time a tax leakage for electronic services sold in to the EU was addressed, EU tax authorities limited the extent of zero or reduced VAT rates, and instead taxed all media published electronically. Now there is a stark difference between VAT payable on printed books and books sold in any other form – audio, digital and downloadable. For the publishing industry, these changes amount to real tax increases and are not simply measures to counter the threat of potential tax leakage.”

The rates levied on digital media throughout Europe average four times those on traditional media such as books and newspapers. In the UK, the difference is between zero percent for traditional media, and 17.5% for digital.

Ms Tickel continued: “Because the focus of the 2003 VAT law changes was on internet based services, there was little public debate, or lobbying activity across the publishing industry in Europe. In retrospect, some governments, notably the French, are now questioning this decision. For the publishers, four years on, the technological capability to read books digitally is only just becoming reality – and choices for new product development mean realisation of the VAT impact."

“Publishers can now reach a wider audience – notably generation Y who prefer digital to printed media. But to reach these consumers the publishers need to invest in technology platforms and build new distribution models. For many countries the addition of VAT completely wipes out the standard profit margin – typically 16% - and there can be little doubt this tax cost presents a further barrier for electronic media."

“The question is, whether the success of European business in the digital space is suffering as a result and whether the original socioeconomic reasons for reducing VAT rates, namely to encourage reading and learning, are being ignored."

“It appears the tax authorities anticipated the future of publishing in the years preceding 2003. Now it is time to readdress this decision with the full attention of those affected, to make an informed choice of how VAT law should apply to the written word in Europe, and to positively encourage digital reading and learning.”

Speaking in November, 2006, ahead of an international conference to discuss online gaming yesterday, the UK's Culture Secretary, Tessa Jowell argued that the recent US move to ban such activity was not the way forward, and suggested that the UK's proposed regulatory code could become the gold standard for gaming firms throughout the world.

In a radio interview, Ms Jowell explained that: "In relation to gambling, you have three choices; you allow the market to rule, which some jurisdictions do, you prohibit, which some jurisdictions do, or you regulate. If Internet gambling were to be prohibited, it would drive it underground."

The Culture Secretary additionally indicated on Tuesday that the government is considering putting in place a regime which would allow online gambling sites to be registered in the UK, which would allow them to present a "hallmark of quality" to their customers.

"By being licensed, we have signed up to the very tough regulatory codes to protect the public and that that in time will be very good for their reputation," she stated.

The conference, held at Ascot, was attended by delegates from around 30 countries. However, representatives from the United States were conspicuous by their absence, having reportedly declined an invitation to the meeting.

UK newspapers and media organisations were angered by a temporary injunction granted to the Law Society in October, 2006, which they viewed as 'gagging' the UK courts.

A new rule would have allowed people not involved in cases, such as journalists, to gain access to information involving details of claims and defences without first seeking permission from a judge.

It was further decided that the right to inspect court documents in civil cases should apply retrospectively, and it was this provision which especially concerned the Law Society.

The injunction obtained by the Law Society prevented the rule from taking effect pending a full High Court hearing on the matter.

”The Law Society was granted an urgent injunction on Friday evening to prevent the Court Service from permitting public access to statements of cases filed at court before today. New court rules come into force today permitting public access. The injunction is a temporary one only that will preserve the status quo until Thursday when the High Court will consider the issue fully. The injunction does not apply to statements filed from today."

”While the Law Society supports public access to statements, several of our members became concerned last week that the change would apply not only to new cases but also retrospectively to old cases, many of which have long been closed. The Court Service reversed its position on the interpretation of the rule, putting many clients in the unreasonable position of having to apply to court at very short notice if they wanted statements to remain confidential."

"Court rules must strike a balance between the right to privacy and the public interest in open and transparent justice. Clients who were involved in litigation prior to the new rules had a legitimate expectation that the balance would not suddenly shift around them. At the next hearing, we will be asking the court to consider whether this retrospectivity is fair.”

In July 2007, the UK's new Chancellor of the Exchequer Alistair Darling, ruled out any immediate changes to the tax system aimed at making the private equity industry pay more tax, saying that to do so would send out all the wrong signals to the City.

In his first interview with the press since being appointed Chancellor in Prime Minister Gordon Brown's new-look cabinet, Darling told the Financial Times that the government should not bow to pressure from unions, the public and from within the ruling Labour Party to end the tax privileges currently enjoyed by private equity firms operating in the UK, even though such a move would be a popular one.

“I think we should be very, very wary indeed of a knee-jerk reaction or a reaction to a day’s headlines into making a tax change that could result in unintended consequences and undesirable consequences,” he told the paper, adding: "If any tax changes need to be made in this or any other area, they ought to be made in the proper context of considering what is best for the economy overall. Once you get yourself into a situation where you make economic policy up on the trot, then you get into huge difficulties."

The activities of private equity groups have come increasingly under the microscope, as some of Britain's biggest firms have become targets for buy-outs. This has prompted fierce criticism from labour unions, which charge that private equity groups are effectively rewarded for sacking staff and stripping a company's assets with a tax system which lets them take advantage of taper relief rules on capital gains at rates as low as 10%.

Private equity firms have also come under fire for loading up on debt to finance their take-overs and using interest payments to offset corporate tax in the companies they buy.

In April 2007, HM Revenue and Customs on announced arrangements enabling investors with offshore accounts to disclose to HMRC any income and gains not previously included in their tax returns.

"HMRC has recently obtained information about holders of offshore accounts from a number of banks and has obtained similar details through the European Savings Directive."

The banks in question were thought to include Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB, according to reports.

"There is nothing wrong with holding an offshore account as long as you pay any tax due on the money deposited in it, and on the interest from it. If you have done this you do not need to use the Offshore Disclosure Facility."

"We want to encourage those with unpaid tax and duties to pay what they owe. Therefore, we are introducing the Offshore Disclosure Facility to help them get their tax affairs up to date."

The facility is open to those who hold or have held an offshore account, either directly or indirectly, that is in any way connected to a loss of UK tax and/or duty.

For a limited period, taxpayers can come forward and make a full disclosure of all undeclared liabilities, not just those connected with an offshore account. Personal disclosures or those made on behalf of others will be accepted under the terms of the Offshore Disclosure Facility.

There are two stages to the process, namely notifying HMRC of an intention to disclose, and making the disclosure and payment.

To use these arrangements, investors needed to notify HMRC by 22 June 2007 of their intention to make a disclosure and then make their disclosure by 26 November 2007.

After disclosure and payment, HMRC will acknowledge the disclosure and payment, and will inform taxpayers by 30 April 2008 if their disclosure has been accepted.

"At the end of the notification period, HMRC will target those with offshore bank accounts and undeclared tax liabilities who have chosen not to come forward to make a disclosure."

Also in April 2007, the FSA published an update on the investment entities listing review which is to lead to a further consultation on a proposed single listing regime for all UK and overseas closed-ended investment funds.

The update was announced in response to feedback received from the Investment Entities Listing Review. The consultation proposals, published in December 2006, included clarifying the importance of a company's investment policy; explaining the FSA's decision to withdraw its proposal to abolish the directive minimum regime for overseas investment companies, and introducing new listing categories to make it clear to investors what obligations a listed company is subject to.

"Throughout our consultation on this aspect of the listing rules, we have been conscious of our responsibility to protect investors while having regard to the competitiveness of the UK market," said Hector Sants, FSA Wholesale Managing Director. "We are persuaded by the responses that have indicated a preference for a single regime. This will form the basis of our proposals when we consult in June."

"The consultation has also sparked an important debate about the nature of the wider listed market and the segments of the listing regime that carry differing levels of regulatory requirements particularly with regard to overseas companies," Sants added. "We will explore those issues in a separate paper later this year."

In March 2007, the Government's strategy to combat money laundering and the financing of terrorism was launched.

The strategy, which has been drawn up with law enforcement agencies, policy departments and the private sector, sets out a series of new measures and key priorities for the future, designed to increase the use of the financial system as a weapon against international crime and terrorism.

"The Government's over-riding goal is to protect its citizens and reduce the harm caused by crime and terrorism. The strategy published today sets out a comprehensive programme of financial measures, supported by UK-sponsored international standards that deter crime and terrorism; detect it when it happens, and disrupt those responsible and hold them to account".

A report published in December, 2006, by the Financial Services Authority (FSA), shows that consumers are getting better outcomes in the way their mortgage endowment complaints are handled, but that there is no room for complacency.

Since July 2005, the FSA has been examining how 52 firms, covering 90% of the mortgage endowment market, handle complaints. The report revealed that the regulator had concerns with regard to 22 firms, 14 of which have taken or are taking remedial action to improve the quality of their complaints handling.

The FSA is also urging firms to plan ahead. This includes proactively helping consumers who cannot avoid shortfalls set up sensible repayment plans when their policies mature.

"It is encouraging that firms have improved the speed and quality of how they handle complaints. News of a potential shortfall is a major worry for consumers and firms owe it to them to deal with their complaints quickly and fairly. We are keeping a close eye on this to make sure that firms continue to do just that. Firms must also look ahead and not focus solely on the here and now. They need to pay particular attention to helping people deal with shortfalls when policies mature."

Since 2000, the FSA has fined 10 firms more than GBP14 million for mishandling mortgage endowment complaints. To date, firms have looked at more than 1.8 million consumer complaints and paid over GBP2.7 billion in compensation.

In November, 2006, the UK's Financial Services Authority on Friday published a paper setting out its assessment of the overall costs and benefits for the financial services industry of implementing the Markets in Financial Instruments Directive (MiFID).

The paper indicated that, under certain assumptions, MiFID could generate some GBP200 million per year in quantifiable ongoing benefits, which will be attributable mainly to reductions in compliance and transaction costs.

However, the quantified one-off cost of implementing MiFID could be between GBP870 million and GBP1 billion, with ongoing costs of around an extra GBP100 million a year.

Hector Sants, FSA Managing Director Wholesale and Institutional Markets, observed that:

"It is in the nature of regulation that costs are relatively easier to define and quantify for firms while benefits can be harder to pin down. As we have already foreshadowed, it is clear that implementation of MiFID represents a substantial cost to industry particularly in the upfront years, but it does create the potential for revenue opportunities over the longer term. We would encourage firms to focus on these opportunities."

The cost estimates are based on a survey of firms in which they were asked to set out their actual and/or expected budget for MiFID implementation. The results from this survey were then aggregated using estimates of the total number of firms directly affected by MiFID.

The benefits were calculated against a number of scenarios relating to the impact of MiFID on business practices and dynamics in the UK’s financial services industry and the extent to which MiFID contributes to the aim of the Financial Services Action Plan in helping to foster a single integrated market in EU financial services.

In June 2007, the UK's Bar Council published a statement outlining the industry body's thoughts on the government's Legal Services Bill.

Commenting as the Legal Services Bill received its Second Reading in the House of Commons, the Bar Council emphasised the need to put consumers first in any changes to the current legal framework.

"The Bar Council is in favour of the modernisation of legal services and believes that the Bill as presently formulated by the House of Lords benefits the consumer interest while also maintaining a strong and independent legal profession."

"At the heart of the Bar's position is that proper regulation of the legal profession is needed to ensure that consumers and the wider public can be confident in the quality of the services they receive. In light of the Bill's consideration by the Commons this week the Bar Council is keen to make clear to MPs and users of legal services its position on a number of key issues."

The issues addressed by the Bar Council in its statement were broken down into the following key areas:

"Legal Services Board (Independence): The Bar Council believes that, to reinforce consumer confidence in the profession, it is vital that the proposed Legal Services Board (LSB), as the oversight regulator of legal services, is fully independent. It supports provisions in the Bill for appointments to the Board to be non-governmental and made by the Lord Chancellor with the concurrence of the Lord Chief Justice. Safeguarding the independence of the profession, through an independent Legal Services Board is essential in safeguarding the international reputation of the English legal profession."

"Legal Services Board (Powers): The Legal Services Board (LSB) needs to have an effective range of powers over providers of legal services and front line regulators. But the Legal Services Board (LSB) should only intervene where there is some significant challenge to the regulatory objectives. Otherwise, the LSB would amount to a costly and unnecessary second tier of regulation."

"Complaints’ Handling: By January 2006 the Bar Council had already responded to the recommendations of the report of Sir David Clementi into Legal Regulatory Frameworks through the establishment of the Bar Standards Board (BSB) which split the representational and regulatory aspects of the Bar Council's work. The Bar has been repeatedly commended by the Government and Legal Services Ombudsman for its strong performance in complaints’ handling, at no expense to the public. The Bar Council therefore believes it would be against the consumer interest not to provide the Office for Legal Complaints (OLC) with a discretion to delegate the investigation of complaints to approved regulators."

"Alternative Business Structures: The Bar, in principle, has no objection to the development of Alternative Business Structures (ABSs). To protect the public and consumer interest, ABSs must be regulated by approved regulators, who should ensure that they do not diminish access to justice."

"Costs: The Bar Council is concerned that, under the Bill, all costs of the new structure will fall on legal service providers. The Bar Council believes that the costs should be shared between the legal profession and the Government to avoid excessive costs being passed back to the users of legal services."

In April 2007, the UK's Legal Services Complaints Commissioner, Zahida Manzoor declared the Law Society's complaints handling plan for the period 1 April 2007 to 31 March 2008 to be adequate.

The declaration is likely to have come as something of a shock for the legal profession's representative body, which over the past few years has been more used to defending itself against accusations of inadequate complaints handling levelled at it by the LSCC.

The newly agreed complaints handling plan followed a period of detailed discussions between the Office of the Legal Services Complaints Commissioner and the Law Society.

"I believe the greater collaborative approach adopted by the Law Society this year has been fundamental to producing a complaints handling Plan for 2007/08, which not only focuses on improving the processes and procedures of the Law Society but more importantly its wider business improvements."

The Commissioner asked the Law Society to include in its Plan the key deliverables from the Legal Complaints Service and Solicitors Regulation Authority Improvement Agendas.

"This is the first year I can recall where the Law Society has committed to delivering wider business improvements which better serve the needs of all its users and I look forward during the Plan year to seeing the potential benefits being realised for the consumer, profession and the Law Society."

However, she also sounded a note of caution in agreeing the plan by pointing out the importance of the Law Society being more proactive in managing performance against the targets and delivery of its plan earlier in the year.

"Since I was appointed as Commissioner two years ago a reactive approach by the Law Society has resulted in effort being made during the latter part of the year once there has been realisation that some targets are unlikely to be met. This approach has been unsatisfactory and would not be acceptable in future years."

"With the proposals for the new Office for Legal Complaints, although not envisaged to be in place until 2010, it is imperative that a step change in the handling of complaints by the Law Society is made to ensure improvements are delivered sooner. "

Also in April 2007, Lord Falconer, then recently unveiled as the UK's first Secretary of State for Justice, hailed the creation of the new Ministry of Justice as a "huge step forward" in the government's drive to reform courts, prisons and the probation service.

Suggesting that it made sense to bring together all the people involved in the justice system, Lord Falconer announced that:

"I am honoured to have been chosen by the Prime Minister for the task of focusing the justice system on what matters - protecting the public and reducing re-offending."

"It makes sense to bring under one roof everyone looking after the criminal and civil courts, sentencing, imprisonment, community penalties and rehabilitation."

"This is a huge step forward in making sure we have a justice system that works for the public, punishes the guilty and offers a realistic prospect of rehabilitation for the contrite."

The Ministry of Justice came into being on May 9, and comprises the National Offender Management Service from the former Home Office, the Office for Criminal Justice Reform and the Department for Constitutional Affairs (DCA).

The new department has responsibility for the courts, sentencing, prisons, and rehabilitation, in addition to DCA policies like voting, crown dependencies, human rights, tribunals and freedom of information.

In December, 2006, Ms Manzoor announced the targets she had set in relation to the handling of complaints about members of the Law Society for the period 1 April 2007 to 31 March 2008.

In determining the targets, the Commissioner stated that: "I have been pleased with the constructive work between my Office and the Law Society which has led up to the setting of these targets and am grateful to the Law Society for its input."

The Commissioner has set targets in three key areas, in order to bring the performance of the Law Society to a level that moves it closer towards effective and efficient complaints handling.

The first of these areas is improving the speed with which complaints are handled by the Law Society. One of the targets is that by the end of March 2008, there should be no more than 65 cases that have been open for 12 months or more.

Improving the quality of complaints handling by the Law Society continues to be a priority area. In order to deliver improvements in this area the Commissioner has set a range of targets. One is that the Law Society must share guidance on levels of financial redress with the consumer and solicitor in at least 85% of cases.

The Commissioner has also set the Law Society a target that 88% of consumers should receive a substantive response within 45 days of receipt of the complaint.

"This target does not require the complaint to be investigated, it only requires the Law Society to accurately identify and communicate all the issues, specific to the consumer's individual circumstances to enable the complaint to progress. It is not unreasonable for a consumer to expect to receive this letter within a month and a half."

The final area in which the Commissioner is driving for improvement is in the Law Society's financial and resource management, and its ability to implement change.

The UK's Legal Services Minister, Bridget Prentice in December, 2006, asked lawyers to help open up the legal profession to people from different backgrounds, in order to retain and enhance public confidence.

Speaking at the Law Society's Equality and Diversity forum in London, Ms Prentice said that the legal profession should be - and be seen to be - representative of the people it serves.

She challenged more law firms to publish their equality and diversity figures to show their commitment and acceptance of the valuable contribution diversity and equality made, which would increase staff morale and public confidence.

The Legal Services Minister explained that: "In a modern and democratic society, equality and diversity should be acknowledged, taken seriously and celebrated. It is not enough to say we are doing it, we must show that we are".

"Some law firms have taken up my challenge to them last year to publish their diversity and equality data to give a visible sign that the legal profession is at the forefront of upholding our values. But not enough!"

"Almost everyone will use legal services at some point in their lives. People may choose to use firms that have demonstrated their commitment to diversity and equality. Publicly declaring their diversity policy therefore makes business sense."

At the same time, she announced the findings of a working group, set up by the Department for Constitutional Affairs to explore the recommendations made in the Increasing Diversity in the Legal Professions Report.

The working group identified a number of barriers that people face in pursuing a career in the legal profession and suggests ways of overcoming them.

"Today's report outlines the problems people from certain groups face when trying to pursue a career in the legal profession. Those barriers can occur at any stage of a career."

"It is important that, in addition to encouraging people from a wide range of backgrounds into the profession, there are policies and practices in place that will make them want to stay in the profession."

"Opening up the profession to people from diverse backgrounds and educational establishments will bring innovation, creativity and further skills for firms to benefit from."

It emerged in December, 2006, that magic circle law firm, Clifford Chance had converted from an US limited liability partnership to become an UK LLP.

In a statement announcing the move, quoted by The Lawyer, managing partner David Childs explained that: “After extensive investigation, the firm has concluded that a British LLP best suits our needs as regards liability, tax and structure, while retaining the culture and organisation of an international partnership.”

The move follows a similar decision by Allen & Overy in 2004, and may signal the start of a growing trend, with other international firms such as Linklaters and Freshfields Bruckhaus Deringer also reported to be considering conversion to UK LLP status.

According to The Lawyer's report, only the firm's Amsterdam, Beijing, Brussels, Dubai, London, and Shanghai offices will operate within the new framework, with the remainder of its 29 international offices being obliged to operate as sub-entities of the LLP due to regulatory factors.

The UK government's new Legal Services Bill, designed to overhaul the way legal services in England and Wales are regulated, was published in parliament in November. 2006.

The Legal Services Bill introduces sweeping reforms in the regulation of the legal sector, brings in an independent complaints body and opens the way for consumers to buy legal and other services under one roof.

The new Legal Services Board will act as a single, independent and publicly accountable regulator with power to enforce high standards in the legal sector, replacing a number of regulators with overlapping powers.

The Bill, published last week by the Secretary of State for Constitutional Affairs and Lord Chancellor Lord Falconer, also introduces:

"Today's proposals aim to increase public confidence in acquiring legal services that are fit for purpose. The Legal Services Board will oversee approved regulators who will be required to separate regulation and representation, thus removing any conflict of interest."

"Currently, bodies that regulate legal services provision also act as representatives of their profession, a position that could raise the question of impartiality."

"The Office of Legal Complaints will further increase public confidence through handling consumer complaints against legal services providers and ensuring a quick and fair response."

He concluded: "These are bold steps. But they have been taken after long and careful study, informed by a large cross-section of people from expert bodies such as the Office of Fair Trading, to the consumer panel to individual complaints from consumers."

Company Law

In May 2007, a group of foreign multinational companies based outside the European Union were refused the right to claim back tax from the UK government in a key test case ruling by the House of Lords.

The five-member panel of law lords ruled 5-0 against the companies' arguments that the UK had violated anti-discrimination clauses in double taxation treaties by making them pay advanced corporation tax on dividends paid to foreign parents from UK subsidiaries when similar dividends paid to UK parents did not attract the tax, which was abolished in 1999.

The group litigation, led by some 50 companies from Japan, Switzerland and the US in the action which became known as the Boake-Allen case, effectively reverses decisions made by the Court of Appeal and the High Court and will be considered a major victory for the UK government after a similar claim was partially upheld by the European Court of Justice last year.

According to the law lords' verdict, the scope of the group's claim was much narrower than that of cases based on EU law, and while UK advanced corporation tax may have breached the anti-discrimination clauses set out in the relevant double tax avoidance treaties, those provisions had not been implemented in the UK.

Commenting on the verdict, Bill Dodwell, head of tax policy at business services firm Deloitte, noted that the outcome would be likely to "make it very much harder for foreign multinationals to make claims based on EU tax cases."

However, Simon Whitehead of Dorsey and Whitney, which represented the claimants in the Boake-Allen case, says that multinationals hoping for a more favourable ruling can still take some solace from the law lords' verdict.

"This could interestingly make other claims seeking to enforce such articles beyond the context of ACT look more attractive," he was quoted as observing by the Financial Times.

In March 2007, then Chancellor of the Exchequer Gordon Brown (now the UK's Prime Minister) surprised many by announcing a 2% reduction in the rate of corporation tax and a 2% cut in the basic rate of income tax, representing the first major cut in these taxes in many years.

Taking centre-stage in Brown's last budget speech was the announcement that corporation tax would be cut by 2% to 28%. According to the Chancellor, this would bring the UK's corporate tax rate below both the OECD and EU15 average. However, tax experts observe that while the Chancellor has given with one hand, he will claw back much of this lost revenue with the other through changes in capital allowances.

According to the Treasury, the reform of the capital allowance regime will "better reflect true economic depreciation," by ensuring that business investment decisions reflect commercial rather than tax considerations. But for manufacturers and companies with large property portfolios, the changes could well cancel out any benefit brought by the cut in corporate tax.

But in a somewhat confusing message for the small business community, Brown also decided to increase the rate of corporate tax for small companies with profits up to GBP300,000 per year by 3% to 22% over the next two years in a bid to ensure "fairness across the tax system." This will entail a 1% increase from April 2007, another 1% hike in April 2008 and a final 1% increase in April 2009. This move is being seen by the Treasury as part of tackling "tax motivated incorporation" and an initiative towards "refocusing incentives for small businesses towards those businesses that reinvest," but tax experts argue that the move sends conflicting signals about government policy in this area.

More positive measures affecting business announced in the budget include: the introduction of an Annual Investment Allowance of GBP50,000 which will target investment support on all businesses that are investing for growth helping to alleviate the cash flow constraints which confront small and growing businesses; and an increase in the headline rate of the R&D tax credit rate for SMEs to 175% from 150%, and increasing the R&D tax credit rate from 125% to 130%, from April 2008.

Richard Lambert, director-general of Confederation for British Industry (CBI) in September, 2006, warned that proposed pension reform legislation, which includes automatic pension scheme enrolment and compulsory company contributions, will be hard for small firms to adopt and could undermine existing pension schemes.

Unless the burden is reduced there are real risks that employers will react in ways which could jeopardise the objective of increasing private pension saving, Mr Lambert told the Secretary of State for Work and Pensions, John Hutton.

In a statement, the CBI warned that this could include employers 'levelling down' existing pension contributions, or result in employees being discouraged from remaining opted-in to the new personal pensions accounts.

It is also vital that trust in pension schemes is not jeopardised, the Confederation urged, explaining that:

"If it is, people are likely to opt-out and the mission of increasing pension saving, which business backs, will be unsuccessful."

To prevent this, the CBI is urging Mr Hutton to adopt a series of measures aimed at assisting both small firms without pension schemes, and employers with existing arrangements, to ensure cost increases and administrative burdens are kept to a minimum.

These include fixing the level of compulsory employer contributions at 3%, with a reduction for the smallest firms, and a six month waiting period before staff are automatically enrolled into schemes.

Employers should also be kept at arms' length from the administration of the new pensions accounts, the CBI argues, and a light-touch, risk-based compliance regime should be enforced.

The CBI's submission to the Government's pensions white paper calls for a package of proposals including:

Phasing in compulsory employer contributions over three years, with a Government commitment to firms not to ratchet up the level by fixing it in the bill at 3% of employees' salary.
Time-limited financial support for employers with fewer than 50 staff through reduced compulsory contributions - 2% of employees' salary instead of 3%.
Minimising the administrative and cost burden on employers via a six month waiting period before employees are automatically