For Sport

Perkins Slade shortlisted for a Customer Service Award

By Emma Drew

August 3, 2015

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by Craig Peters, Sherlock PR

A Birmingham-based insurance broker has been shortlisted for a national customer service award. Perkins Slade, one of the 12 founding members of the UNA Alliance, the organisation owned equally by 12 of the UK’s largest independent regional insurance brokers, has had its vast portfolio of work with UK National Governing Bodies of Sport recognised as it goes up against four other brokers for the Customer Service Award at the UK Broker Awards.

With elements of risk evolving within UK organisations, Perkins Slade has spent the past 12 months raising awareness of the importance of risk management specifically at over 2,500 local tennis clubs, for there had been an increase in both the number and cost of claims against the sport’s National Governing Body, The Lawn Tennis Association. Perkins Slade would aim to encourage such clubs to undertake risk assessment, with an aim to reduce incidents, claims and, by extension, premiums. Importantly, as most clubs are run by volunteers, this needed to take into account a general lack of training and expertise in this area.

The firm created a series of insurance focused microsites – online platforms that collate all of the insurance information for a particular client in one place. Designed to mirror the host associations’ own website as closely as possible, the user then has the confidence that the information is provided by a reputable source. Content of the microsites is managed by Perkins Slade staff, ensuring it is accurate and up-to-date, and it is grouped into sections that speak in a relevant manner to different constituents such as members, clubs, and coaches. Addressing specific details of the insurance cover provided, the firm also included “frequently asked questions” that addressed common and recurring issues.

Perkins Slade also helped educate volunteers within Tennis Clubs on the potential risks they face. The firm created a system, with untrained volunteers in mind, displaying simple functionality which helped them assess and understand the risks at their clubs. In turn, this has helped reduce injuries at these clubs and this was also supported by a series of regional workshops, attended by local club committee members.

As a result, the launch of the microsites has greatly reduced the number of insurance related enquiries that are being handled by Perkins Slade’s clients, which has freed up time for them to concentrate on their core activities.

Andy Goulbourne, Associate Director, Sport & Recreation at Perkins Slade comments: “We are absolutely thrilled to be shortlisted for this award, particularly as it puts our customer service levels firmly in the spotlight. Our ethos is all about providing a high quality and committed service to our clients and this award nomination is down to the care and attention each member of staff at Perkins Slade demonstrates on a day to day basis. Like with any business, great customer service is essential for building a solid reputation, attracting and retaining customers, and overall customer growth. To that end, we will always prioritise and maintain a commitment to delivering first-rate customer journey for all of our clients.”

The UK Broker Awards are run by Incisive Media, one of the world’s leading business-to-business (B2B) information providers, serving the financial and professional services markets globally. The event will take place on The Brewery, London, 25th September.

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Insurance Act 2015 – Fraudulent Claims

By Emma Drew

July 2, 2015

Insurance Act 2015 – Fraudulent Claims

The Insurance Act received Royal assent on 12th February 2015 and introduces the most significant statutory change to UK commercial insurance law in over 100 years.

In our third article examining the effect of the Act, we will consider how the law relating to fraudulent claims will change.

What is the current position?

In most insurance policies the sanction available to insurers in the event of a fraudulent claim is not defined, but typically allows the insurer to cancel a policy if a fraudulent claim is made. This lack of clarity, however, means there is uncertainty as to when such cancellation would be applied and whether it would apply to just the fraudulent claim, or if to all claims under a policy.

The current law, under the Marine Insurance Act 1907 (the last time the laws for commercial insurers were codified) allows for the insurer to cancel the policy from the outset. This is often considered unfair on a policyholder, as they would be required to pay back any payments made in respect of previous, legitimate claims and so insurers have been reluctant to enforce it.

How will the law change?

Once the Insurance Act is in force, the law relating to fraudulent claims will be much fairer and easier to understand. The main points to note are:

  • When a policyholder commits any fraud in relation to a claim, the insurer will have no liability for the claim in its entirety
  • If the insurer has previously made any payments in relation to the fraudulent claim, they will be entitled to recover these
  • On giving notice to the policyholder, the insurer may treat the insurance policy as having been terminated from the date of the fraudulent act
  • If the policy is terminated as above, the insurer’s liability for any claims occurring before the time of the fraudulent act will remain, but they may refuse any liability in respect of a claim that occurs after this point
  • The insurer has a discretion about whether to refund any premium from the point of cancellation

It is worth noting that the above sanctions for fraudulent claims are universal, and so apply equally to both consumer and non-consumer insurance contracts.

Individual fraud under a group policy

Under the new act, if a member of a group policy commits a fraud as part of a claim, this member will be separated out by the insurer and treated as if they were a direct party to the insurance contract. The sanctions above will be applied to them as an individual, allowing other members claims to proceed unaffected. This is a much fairer way of dealing with such matters and prevents innocent members of a group policy being penalised for the actions of a fraudulent individual.

For further information or to discuss the issues raised by the changes please contact your usual Perkins Slade representative or contact Andy Goulbourne.

 

 

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Insurance Act 2015 – Warranties

By Emma Drew

June 12, 2015

Insurance Act 2015 – Warranties

The Insurance Act received Royal assent on 12th February 2015 and introduces the most significant statutory change to UK commercial insurance law in over 100 years.

In this second of a series of articles, we will examine the effect the new law will place on warranties.

What is a warranty?

  • A warranty is often referred to as a promissory term, by which a policyholder undertakes something particular with the assurance that the condition shall be fulfilled.
  • It is a way of ensuring insurers remain liable for risks, as long as policyholders keep to their promises.
  • It is a condition that must be complied with, whether it is material to the risk or not.
  • If a warranty is breached the insurer is discharged from their liability.
  • If a policyholder does not comply with a warranty, the insurer is not required to pay a claim, regardless of whether the warranty is relevant to the loss.

How are warranties created?

Currently, warranties are created either:

  • As an express term within an insurance contract (or, less commonly, as an implied term), or
  • Through a “basis of contract” clause, which has the effect of turning into a warranty any representation made to insurers at the time the policy was first arranged.

Warranties require absolute compliance since even minor breaches can have severe implications. This has made them very unpopular with the courts, which has stripped away at the very nature of warranties over recent years.

How will the law on warranties be different under the Insurance Act?

There are four main areas where the law is to change:

  1. “Basis of contract” clauses will be prohibited. This means that any warranty that applies to a policy must be expressly agreed between the insurer and the policyholder.
  2. Warranties will become “suspensive” conditions, so an insurer will not be liable for a loss that occurs whilst the warranty is breached, but once the breach is remedied the insurer’s liability will be restored.
  3. Insurers will no longer be able to rely on warranties that are irrelevant to the risk.
  4. Finally, where a warranty relates to a loss of a particular kind, location or time, the insurer cannot rely on a breach of the warranty if the policyholder can show that the breach of that warranty could not have increased the risk of the loss that occurred.

Summary

  • The Insurance Act seeks to abolish the existing common law regarding warranties and replace it with something that is fairer to both insurers and policyholders.
  • Warranties will remain an important way for insurers to manage the risks they accept.
  • It will be as important as ever that policyholders are aware of and comply with all warranties that apply to their policies.
  • Communicate to their brokers anything that prevents them from complying prior to a loss occurring.
  • The application of warranties will be easier for policyholders to understand, which should give them increased confidence in their insurance policies.

In the next article we will consider how the Insurance Act will change the law regarding insurer’s responses to fraudulent claims.

How can we help?

For further information or to discuss the issues raised by the changes please contact your usual Perkins Slade representative or contact Andy Goulbourne.

 

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Perkins Slade raise funds for Acorns charity

By Emma Drew

April 2, 2015

Perkins Slade raise funds for Acorns charity

Perkins Slade have been busy fundraising over the past twelve months for designated charity Acorns Children’s Hospice and are pleased to announce that a total of £2,100 has been raised.

Fundraising activities have included events and a number of office based initiatives, such as themed dress down days, bake sales and sweepstakes. A special mention goes to Richard Doubleday, Managing Director of Sport & Recreation, who also raised significant funds for the charity by participating in the Hiscox Yorkshire Cycling Challenge last July, in the first part of the Tour de France 2014 route.

A cheque was presented to Charlotte Anson from Acorns charity by Nick Tamblyn, Perkins Slade CEO and staff members who have each generously contributed towards the cause.

The money raised will enable Acorns to continue to provide essential specialist nursing care for vulnerable children and young people living with life limiting illnesses, whilst offering support groups and bereavement counselling to the families who are also affected.

Nick Tamblyn commented, “Acorns was chosen by Perkins Slade staff as our charity for the year because of its strong local roots and the vital role it plays in caring for young people that are not expected to reach adulthood, 24 hours a day, seven days a week. I am delighted by the work that has been done by our charity committee to raise such a significant sum, whilst making sure we had some fun along the way”.

In the last year the charity has supported over 760 children and more than 980 families. Acorns aims to double this figure and expand its services to help a further 2000 families in the next few years and it is through continuous fundraising the charity is closer to reaching this goal.

Charlotte Anson from Acorns added, “We are extremely grateful to everyone at Perkins Slade who has participated in the fundraising for the charity. Any additional funds raised goes towards organising extra services such as a hydro therapy pool and planned days out, providing enjoyable and memorable experiences for these children and their families”.

In addition, Perkins Slade have also been supported by a number of insurers including Hiscox, Aspen, XL Insurance, AIG and Zurich, who have given generously by kindly donating gifts to support the cause further.

If you would like to donate or for more information please visit Acorn’s website.

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Insurance Act 2015 – Duty of Fair Presentation

By Emma Drew

April 1, 2015

Insurance Act 2015 – Duty of Fair Presentation

The Insurance Act received Royal assent on 12th February 2015 and introduces the most significant statutory change to UK commercial insurance law in over 100 years.

In a series of blogs, we will examine the principal changes brought into force by the new Act and the impact these will have for policyholders. To begin, we will look in more detail at the Duty of Fair Presentation.

What is the Duty of Fair Presentation?

It is a long established principal that policyholders have a duty to disclose material facts to their insurers, but this has now been codified into a wider duty “to make a fair presentation of the risk”. To do this, a policyholder must disclose clearly, accessibly and in good faith:

  • All material facts that the policyholder knows, or should have known, or
  • Sufficient information to put a prudent underwriter on notice that they should make further enquiries.

Policyholders are not required to disclose details which diminish the risk, or which the insurer knows, or ought to have known, but as well as the general details of their risk policyholders should disclose:

  • Any special or unusual facts relating to their risk
  • Any particular concerns which led them to seeking insurance for the risk, and
  • Any other fact which those concerned with the particular class of insurance or activity should generally understand as being something that should be included within a fair presentation of the risk to an insurer.

Whose knowledge is relevant?

The Act seeks to define whose knowledge is relevant, which is helpful but increases the onus on policyholders to investigate their risks internally. Within its definition the Act includes:

  • Information known, or that ought to have been known, by the policyholders’ senior management, i.e. those individuals who play a significant role in making decisions about how the policyholder’s activities are managed, and
  • Information known to individuals who participate with the policyholder in the process of arranging their insurance, i.e. brokers and other agents.

Taking this even further, the Act specifies that material facts that are “suspected”, or which would have been known if the relevant investigations were made, should also be disclosed.

So, what does this mean?

In practice, the amount and quality of information that policyholders, and their brokers, will be required to provide to insurers will increase and key to this will be the close working relationship between the two.

It has always been the case that in order to best present a client’s risk to an insurer, a broker should know the client’s business inside out; this will become more important than ever. Policyholders should prepare to spend longer discussing the details of their organisation with their broker, and focus on making sure that they are aware themselves of every activity and circumstance within their business that is relevant to the presentation of their risk.

Gone are the days of a policyholder being able to obtain commercial insurance after providing the briefest of details and failure to make a “fair presentation” of their risk, or failure by a broker to adequately interrogate and present the information, could have significant consequences.

What happens if material details are not disclosed?

Under the Act, Insurers are required to ensure that any remedy for a breach of the Duty of Fair Presentation is proportionate.

For example, if the breach was deliberate or reckless, the insurer could avoid the contract (i.e. treat the contract as if it never existed), keep the premium paid and refuse to pay any claims.

If the breach was not deliberate or reckless, the insurer is required to apply a remedy based on what it would have done had the fair presentation been made. This means that if the insurer would not have entered into the contract had the facts been disclosed, it can return the premium and refuse to pay claims. If the insurer would have charged a higher premium, it can adjust the payment of the claim proportionately and if it would have applied additional or different terms, it can deal with the claim as if those terms had applied.

Whilst these remedies are proportionate to the scale of the breach, they are still detrimental to policyholders and it is essential that a fair presentation of a risk is made to insurers at all times.

How can we help?

For more information or to discuss the issues raised by the changes please contact your Perkins Slade representative or Andy Goulbourne.

In the next update, we’ll consider how the Insurance Act will change the application of warranties on insurance policies and what this means for policyholders.

 

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Budget 2015: What you need to know

By Emma Drew

March 23, 2015

Budget 2015: What you need to know

Its Budget time again and in the run up to the announcement this year we had the added excitement of a Pre-Election Budget.  The excitement ceased however, when George Osborne delivered the ‘Caretaker’ Budget, which to be fair is no surprise.

This month’s guest blog comes to you from Iain Wright of  Claritas Tax.

Our Budget summary emails leave the rhetoric to the News at Ten and your pension advisors to explain how the further reduction in the lifetime limit will affect you and instead focus on the key items that you, our clients and contacts need to know.  This entails searching through the 100 plus paged documents that accompany George’s announcement for the hidden surprises, and from the typically long list we debate how to condense it down to a few key items.  Well, this year it seems the work has been done for us as the status quo has been maintained, with very little update needed to our summary of the Autumn Statement.  With statements such as ‘no short-term give away’ the taxpayer certainly won’t get ‘whatever they want!’

So, to misquote another Status Quo song title, this may be the ‘End of the Line’ for the current coalition government but it won’t be for changes to tax legislation this year. The general election will be held on 7th May 2015 and cuts across the usual Finance Bill timetable. As we have seen in previous election years, there is no set procedure to what happens to the Finance Bill in these circumstances. History shows that the Finance Bill 2015 we see here is shorter, contains very little ‘controversial’ proposals and therefore should receive Royal Assent in a matter of days and before the dissolution of Parliament on 30 March 2015.  Therefore, after the election we can expect a second emergency and possibly a third detailed Finance Bill putting forward the newly elected Government’s substantive proposals.

Proposals that are announced but are not enacted before the dissolution of Parliament, will simply lapse and would have to be re-introduced in the next Parliament. Proposals may also change or be excluded as the Bill is scrutinised through the parliamentary process. To reduce risk of provisions causing delay to the Finance Bill, previous Governments have indicated whether a measure would be included in the pre-election Bill or a post election Bill. That way, if there is a change of Government or if the previous Government is re-elected, they are not bound by the pre-election pledges. This was certainly the case when the Coalition took office in 2010 and is again here.

As the Chancellor has mainly copied the Autumn statement with a few tweaks and submitted that as his Pre-Election Budget, we shall follow suit and do the same with our summary from December last year, but still keeping to our promise to keep it relevant.

R&D tax relief enhanced for large companies and SMEs undertaking subsidised or subcontracted R&D.

The “above the line” credit for R&D tax relief has increased from 10% to 11%.

What it means to you

The above the line credit allows the enhanced tax relief received for undertaking qualifying R&D to be netted off against the actual R&D costs in the accounts, rather than against the tax charge.  A credit equal to 11% of the eligible expenditure is payable by HMRC, although this then forms part of your taxable profits.

From the Government’s perspective, this allows the tax benefit to be matched to the R&D department rather than the Finance department, which should encourage investment.

However, for anyone looking to sell a business, this has an even greater advantage because it increases Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA).  If you have an EBITDA multiple of 6 on a sale, the credit is effectively worth 66% of the expenditure

R&D tax relief enhanced for SMEs.

The super tax deduction for eligible expenditure by companies with, broadly, fewer than 500 employees, has been increased from 125% to 130%. However, The Finance Bill will contain       measures that exclude material costs from the R&D calculation where that spend ends up in a product.

What it means to you

A profitable company will obtain tax relief worth 46% of qualifying expenditure on R&D activities instead of the 20% which would be available without the relief.  For loss making companies, there is an ability to claim a cash payment from HMRC equal to £33.35 for every £100 spent. Although there are increases to the rate of relief some businesses will be affected by a restriction on eligible expenditure on materials used in items that will be sold. This will need careful consideration when quantifying claims for R&D relief.

Tax advantages of business incorporation removed.

Capital gains tax entrepreneurs’ relief will no longer apply to sales of goodwill by individuals or partners to companies on incorporation.  Since the Autumn Statement there has been a relaxation of the restriction so that partners that exit on incorporation will still benefit from entrepreneurs’ relief. Secondly, corporation tax relief will be denied for the amortisation of goodwill arising on incorporation unless that goodwill was originally acquired from a third party.

What it means to you

Many professional practices and other businesses have incorporated in recent years to both benefit from limited liability and to obtain significant tax benefits.  Whilst the commercial benefits are unaffected, the tax treatment will be far less attractive. These measures will have effect for all incorporations from 3 December, onwards.

Incentive to reinvest gains in Enterprise Investment Scheme (EIS) shares

Any gain realised and deferred will now maintain its entitlement to entrepreneurs’ relief when the EIS shares are ultimately sold.

What it means to you

The loss of entrepreneurs’ relief was a big disincentive to individuals wishing to claim deferral relief.  This measure should remove that disincentive and may make it easier to raise EIS investments from individuals who have successfully sold their businesses.

Country by country reporting

UK companies operating abroad will have to provide information on where they make their profits to HMRC. This is part of the UK’s commitment to the OECD’s attempts to reduce international tax avoidance through “base erosion and profit shifting”.

What it means to you

For each tax jurisdiction where it has an operation, the multinational group will need to report the entities resident there and their main business activity and the following aggregated information:

  • revenues split between unrelated and related parties;
  • profit before tax;
  • income tax paid on a cash basis;
  • income tax on an accrued basis excluding deferred tax and provisions;
  • share capital;
  • accumulated earnings;
  • number of employees; and
  • tangible assets other than cash.

This will obviously significantly increase the company’s reporting requirements and compliance costs, which may benefit us more than it benefits our clients!

Arrangements to access trapped tax losses

Arrangements entered into to access otherwise restricted brought forward losses are denied with effect for accounting periods beginning on or after 18 March 2015.

What it means to you

A potential situation is where a parent company with brought forward losses, such as non-trading interest losses or surplus management charges, enters into an arrangement to generate profits in order to access those losses.  In order to fall foul of this legislation, any arrangement made must have a tax avoidance purpose and the tax advantages must be more valuable than the non-tax advantages.  Whilst this should not impact changes within a group on an arm’s length basis, we will need to consider the detailed evidence once available.

Late interest payment rules relaxed

Companies borrowing money from related companies in tax havens will now be able to obtain tax relief on an accruals basis rather than on a paid basis.

What it means to you

This has been described as an anti-avoidance measure, designed to prevent companies manipulating the timing of tax deductions.  It should, however, benefit a number of our private equity (PE) backed clients who, for perfectly legitimate reasons, have shareholder-lenders resident in tax havens.  Those PE backed companies will now be able to claim tax relief on an accruals basis, avoiding the situation where no tax relief is obtained for many years followed by such a large amount of tax relief in the year of a sale that the losses are redundant.

Note that the position regarding the timing of corporation tax relief for interest on loans from individuals is unchanged.

Tightening up of the Entrepreneur’s Relief (‘ER’) Rules

Whilst the Budget still hasn’t attacked entrepreneurs’ relief in the way we expected, e.g. qualification as an officer or employee, the Chancellor has taken the opportunity to tighten up the rules so that certain arrangements can no longer benefit from ER.

Individuals and members of a partnership who sell personal assets used in the business must now dispose of at least 5% of a shareholding in their company or 5% share in the partnership assets in order for the sale of an associated asset to qualify for ER. Previously there had been no minimum requirement. This is tightening up the ‘associated disposal’ definition.

The ER rules around joint ventures have been used to set up structures under which people with only small indirect stakes in the trading company would benefit from entrepreneurs relief. Now, in order for individuals to benefit from ER, they must hold a 5% stake directly in a company carrying on a trade.

What it means to you

This will particularly affect business owners who hold their company’s trading properties personally. This change is to ensure that there is a ‘meaningful’ withdrawal from the business, which HMRC have commented that people had benefited from the ER rules when this was not the case. To benefit from ER under the updated definition, you must ensure you meet the 5% disposal test. Depending on the wording of the draft legislation,  this may provide opportunities for planning transactions to fall within this definition and benefit from the 10% rate.

This type of structure was commonly set up and used (i.e. the so-called ManCo Structure) where Management would not benefit from ER because they directly held shares in the trading company. The joint venture rules were used whereby management held their shares via a management company and benefited from the ER rules. These type of structures will no longer benefit from the JV rules from 18 March 2015.

The summary is to expect change. So if you are looking for certainty on the tax implications of your transactions; act now. Otherwise you will be exposed to the perils a general election brings!

 

How can we help?

If you would like more information on the Budget Statement, please contact Iain Wright at Claritas tax to discuss further.

 

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