Tax tools

So, Real Time Information is up and running – er, or rather it isn’t.

RTI is one of the latest forms of getting private business to do the work that Government can’t. Basically it necessitates keeping the Inland Revenue (HMRC) informed on a monthly basis about your employees’ pay, benefits, deductions etc.

It has involved a heap of work and learning for us (broad use of the collective noun) and I recall all sorts of dire threats if we’re not up to speed and ready to comply, on time, all the time.

Well, my team are and were. Payroll day today. Can we run it?

No, of course not. The software doesn’t work.

A broadsheet article three weeks ago observed that Whitehall’s record on IT projects “does not fill us with confidence”. Top marks to the Telegraph, though I expect I’ll be forgiven for saying that it wasn’t the toughest of predictions.

I don’t begin to suggest that anything would be achieved by being able to speak to a real person at the Revenue but if it could, you can’t anyway. Today’s recorded message told us:

“We are aware of an issue with some employers trying to submit their RTI returns using the HMRC’s Basic Paye Tools.  We are investigating this issue and will report on this early next week.   Employers should continue to pay their employees as normal even if they have problems with their payroll and can’t submit their PAYE until after they have paid their employee. We apologise for any inconvenience this may cause.”

Oh – so we don’t hang on to the money and tell the staff “hard luck”? Fantastic – thanks for clarifying that one.

We’ve worked out for ourselves that all salaried workers will have to be paid the same as they did last month and wait until…..whenever – for the lavish bonus that Osbo heaped in their direction in the course of his last inspirational budget.

This is the best that UK Government departments can manage?

We just know it’s coming every time. Repeated failure and helplessness.

Embarrassing.

Off target

Yesterday's post contained a brief but striking reminder why cuts to budgets in Government departments like the Court Service are destined to hit the wrong targets.

We have just issued proceedings in the Northampton County Court – which is of course in Salford (To me, to you...) – against three defendants. For anybody who doesn’t know, when you do this you receive, all being well an acknowledgement in the form of Notice of Issue.

In this case, where we sued three defendants, we have three notices of issue even though there is only one set of proceedings. They all arrive in the same post but in three separate envelopes, franked with 58p postage. 

If we had to receive three sheets of paper then they could have been posted together. Take into account the stationery costs as well as the postage, there is a waste in this one instance of something like £1.30. No big deal, you might think, but how many times a day, how many days a year, does this happen?

This one court centre processes something like 7,500 claims a week. Not all of those will involve multiple defendants but many will. In many cases there will be fewer – in other cases more.

It wouldn’t surprise me to know that this one sloppy practice costs best part of a thousand pounds a week. The point is it’s just one small example. It’s indicative of a blindness to simple opportunities to save significant sums – money that could be spent on actually improving the service elsewhere.

The cuts will happen anyway but this sort of unnecessary wastage will continue, so the economies will be made in areas that really matter. A little initiative and the right attitude here could deliver real benefits. Why do we have paper acknowledgements in the post anyway? Why isn’t it done by email?

It would be if we used the on-line facility to issue proceedings but, frankly, like the RTA portal, it is such a mess that we don’t. We would happily email, or if we must fax, papers to the court but of course there is no way of paying other than by sending cheque in the post.

Meanwhile, down here in the West Country, things ain’t a lot better. Bristol is a major court centre doing a lot of business. One thing you expect is that they know what they are doing.

It has just taken us seven weeks to get a case transferred, post-judgment, to another court for enforcement purposes. It’s hard to believe that anybody could make something so simple appear so difficult.

We have a judgment that we want to enforce by attachment of earnings order. The debtor lives in Wiltshire, so we need to transfer to his local court. Practice Direction 70.3 within the Civil Procedure Rules is quite helpful here. It tells us two things very clearly, in case we didn’t know.

First (2.1) that if we want to enforce a judgment in a different county court we “must first make a request in writing to the court in which the case is proceeding...”

Secondly (2.2) that “on receipt of such a request, a court officer will transfer the proceedings to the other court unless a judge orders otherwise”.

So it is a simple request (i.e. a letter) and a court officer deals with the transfer. We have ticked all those boxes.

What happens? First we are told that there isn’t a court file. Why is that? Ultimately, with some help from Trowbridge County Court, we establish there is now a policy of destroying (without scanning) court files after a period of three years.

Fortunately we have essential papers including the claim form and the judgment. We assemble an electronic file and send it to Bristol, and ask them to deal with it again.

Lots of delay eventually results in the following response from Bristol Court. It is one page with no enclosures but it is very helpfully sent by post - not email (or fax).

It comes from somebody in the “pre-judgment section” (sic) who can’t, with the benefit of our correspondence in front of them, spell either the name of the firm or the first line of our address correctly. We are told that the file was referred to a deputy district judge who said:-

“It seems that the claimant’s solicitors are asking for the transfer of this resurrected file to Trwobridge (sic), presumably for enforcement purposes, but this is not clear from the file and they have made no application. Can you please ask them to confirm that they want the file transferred, for wat (sic) purpose and why a transfer for (sic) Trowbridge is appropriate?”

The rest of the story is a boring saga of chasing letters from us which eventually resulted in a call from a different person. He, having been told how simple it was and pointed again to the text of the CPR, assured me that he would “give it his full attention”.

In consequence it took only another fortnight to get the file transferred.

The result seems to be that increasingly we have people in our court offices who have very little clue what they are doing, presumably because they lack training.

Presumably also we can’t afford to train them properly because of the postage bills.

The old one-two!

Grand National Day and the excitement is already building for a truly annual event in our household.

Nobody here has any idea about racing. Father-in-law is the expert so we’ve ‘phoned the bets through and left him to deal with the mysteries of starting prices etc. I’ll cough up later no doubt.

My cluelessness in these matters is directly inherited from my dear old Dad. Let me explain...

Everyone’s heard of Red Rum, the legendary winner of three races in 1973, 1974 and 1977, and runner-up in the intervening years. He was, like me, a Southport lad.

I lived a couple of my very early years a few yards up the road from the garage owned by Dad’s old schoolfriend, behind which the great horse was later stabled though I never met Ginger McCain. Dad clearly didn’t spend enough time with him…

National Day 1973 and we’re sticking pins in the newspaper, pounds at the ready. Well, this is  40 years ago - and Lancashire! 

Mum had to try 50p each way on the Southport entry. Dad wasn’t having any of it. “No horse from Southport is going to win.” He bet his £1 elsewhere - on the nose, of course. “If you’re going to have a bet, make it a real one”, Dad explained.

Two years and £2 later my father, never an intransigent man, was persuaded to have a rethink but pounds on the nose in 1975 and 1976 yielded nowt. “That’s it”, said Dad as Rag Trade took the honours.

You just know what’s coming. I can’t remember which unlucky animal Dad’s pound was on the next year but it wasn’t Red Rum as he made his place in history!

Dad, you’re a top bloke but let’s agree not to go racing today, eh? Good luck everyone.

The roulette of law?

We posted an unusual news report on the website today about the application of Russian law by English Courts.

It’s a topical story, in these early days of referral fee bans and the Huhnes’ jail terms, which portrays as “draconian” English anti-bribery laws, by comparison with their Russian counterparts.

This is the latest product of the litigation tourism on which there has been much comment recently. Observers, including myself, have remarked on the anomaly that is the provision of a first class judicial service for the global elite whilst access to justice for the plebs becomes ever more difficult.

It‘s not all bad, of course. As well as the positive impact on the balance of trade figures, there are more profound and longer term benefits of “having people round to show them how it is done”.

Jurisdiction and applicable law clauses are nothing new to those of us involved in the drafting and/or interpretation of commercial contracts but until recently it is probably right to say that the focus has been on where the match should be played, rather than the rules to be applied.

Most folk can happily grasp the concept that where there is any sort of international element, there might be a squabble about who is to have home advantage. What is rather more difficult to embrace is the notion that a court in one country should decide a case according to the laws of another.

But in an increasingly globalised society, we can surely expect to see more of this. Not only is it a development of commercial practice and case law on an international level but it is also now promoted by conventions like the pan-European Rome II.

What intrigued me today reflecting on this article was the question of how, in time, this is going to impact on the application and development of our own law.

The report features a case involving a Russian businessman and companies he controlled for whom the application of a law made in Russia presumably presents no problems in principle, if not practically.

And it’s part of the attraction to the rest of the world that our judges, particularly those of the Senior Courts in London, have no difficulty in recognising the circumstances in which different laws should be applied, and the distinctions between them.

I say that – but then this was a decision of the Court of Appeal on the question of whether a judge at first instance had exercised those functions correctly!

Assume that in most cases we are getting it right, as it will be, yet there is still the question of where the grey areas creep in, and what shade of grey they will be.

Will a judge who has routinely applied foreign law in cases before him be influenced in the way that he approaches matters of principle and exercises judgment where English law leaves it open to his discretion? The public know almost as well as lawyers the uncertainties and difficulties often created by the fact that an outcome may be determined by what the court ultimately decides to be reasonable.

So, how do we define that in our multi-cultural courts of today? Is it still to be the man on the Clapham omnibus? Or will it be one on the Sapsan train, the Beijing bike or the Mumbai elephant?!

As the fruits of diversity within our society have demonstrated over the last half century, we should probably do well to have a combination of the lot! But is there a risk of losing touch with the foundations of our legal system?

Good lawyers always recognise the sovereignty of Parliament and the need ultimately to interpret statutory law by an understanding of what it was that Parliament intended, ultimately relying on the evidence of Hansard above all else.

The proper application of the laws of this land to this land may be a matter beyond debate but in times when we are perceived, repeatedly, to be leading with the chin on e.g. human rights issues then one can’t help but wonder whether it will be seen as counter-intuitive.

A matter of interpretation

I read this morning the report of a Court of Appeal decision on Monday of this week overturning a third party costs order made by a crown court judge.

It’s the latest episode in the now celebrated farce of the provision by private contractors of court interpreters for defendants with insufficient comprehension of English. As in so many cases (but see below) the proceedings had to be adjourned when the Slovak interpreter did not turn up.  The judge made an order that the provider should pay half of the prosecuting counsel’s costs wasted on the adjournment.

Now, although the case involved that old Private Eye favourite, “Crapita”, which has been the subject of three critical parliamentary and audit reports over its performance, it was not straightforward on this occasion.  Notably, the hearing had been rescheduled only the day before and it is not clear who failed to notify the interpreter.

None of that is remarkable, but this is.  

How much was involved here?  Answer - the princely sum of £23.25.

The first reaction of most people will be to wonder whether it can be possibly be right that the Court of Appeal is mobilized for the sake of twenty quid that a massive enterprise like Capita has been ordered to pay.

It seems laughable against the background of all that is headed in our direction with effect from Easter Monday, headlined by the fundamental change to the overriding objective of the Civil Procedure Rules. 

No longer will it be enough for courts to “deal with cases justly” – they must now do so at proportionate cost.  The two requirements sit side by side.

It will be for the Court of Appeal ultimately to give guidance, if necessary, on the impact of this change but I venture to suggest that it means even if you have a good case, you cannot expect to spend disproportionate sums of money pursuing it.

On the face of it you would say that this one would not get off the ground.  But of course it would because what people do, and will continue to, forget is that these rules only apply to awards of costs between the parties.

I have yet to see the full report but hazard a guess that Capita won’t have recovered their costs of this litigation, nor would they expect to.  There was an important point of principle involved for them, and that’s a right to be preserved subject to the overall debate about who funds the system in austere times.

The same philosophy applies to all those supposedly insignificant claims, albeit for a hundred times and more the value of the initial costs awarded in this case.  I’m talking about “small claims”, of all types, that people and businesses want and need to litigate up and down our country everyday.

From 1 April, the no-costs environment will apply to most non-personal injury cases worth less than £10,000.  Insurance companies continue to hammer on the door of No. 10 for a rise in the personal injury limit.

The point is that these are claims that depend for their success on the reasonable prospect of securing a costs order against the wrongdoer, when the case succeeds.  Whether it’s the litigant themselves or their lawyer taking the risk on what seems to be a meritorious case, there is hope as long as costs-shifting continues.

Unlike Capita, the majority of people for whom relatively small amounts, in litigation terms, are important cannot afford to fund their cases regardless of the outcome.

The government is now promoting contingency fees but of course has it upside down.  A percentage of very little is even less.  Contingency fees ought to be applied, if anything, to big value cases.

So, expect to see more not less of these anomalies.  Whilst our government has decreed that it’s not appropriate for ordinary folk to have a decent chance of pursuing sums of money that might be the best part of year’s net income, its fine if you can afford to do it (Five grand).

Step forward the celebrities, Russian oligarchs, the liability insurers (still raking in the premia) and the PFI outfits scooping millions out of the public purse to provide poor service and trips to the Court of Appeal to defend it.

Oh – and one final thing – who in their right mind thinks that £46.50 is adequate reward for a barrister to turn up anywhere and do anything???

Holy grail

This one’s for embattled personal injury lawyers up and down the country but you needn’t be one of those much maligned creatures to read it. Chances are you’ve only heard one side of the story and that it’s the garbage peddled by the Association of British Insurers (“ABI”) and their members.

The backdrop is the decision by our Government  to slash the costs that insurers must pay to lawyers representing victims of what Mr Cameron and his Eton chums term “low value” road traffic accidents. Currently it’s £10,000 and it’s set to rise very soon to £25,000. Small change, eh?

As one of the so-called “fat cat lawyers” I think these are very significant sums. See Five grand for more of that and The Lions Share for more of latest events.

Already, law firms are going to the wall, having conceded that they can’t operate at these levels. Many people may not shed a tear, believing that they deserve it for having been part of a ‘compensation culture’. 

Unbelievably, in the present climate, this Government doesn’t seem to give a damn about the job losses and the knock-on effects of these businesses going bust. It’s going to cost us all (not just lawyers) millions.

So, guys – where are we at?

The vast majority of RTA claims must be run for £500. I haven’t yet talked to a lawyer who believes it can be done – not properly. We all know there are outfits who will say it can be done. They are the creation of the insurance industry that has fed them and will in time cast them aside. Pay Peanuts, you get monkeys.

It can’t be done.

The next dilemma will be the increase in the small claims limit, probably to a minimum of £5,000 (see above). That will mean no costs at all are recoverable, other than what you can charge your client.

I’ve heard heart-warming tales of rival firms agreeing that they won’t break ranks on this in the coming months, that they’ll do the only sensible thing and pass on some of the cost to the claimants they represent. If they don’t then the only blessing of the internecine scramble that follows is likely to be that it’s soon over.

Of course, the amount that you’re allowed to charge even a very happy and contented client has been restricted. In most low-level claims it will turn out to be a sum which to the claimant is a noticeable chunk of compensation and which to the lawyer makes little difference. Bear in mind the extra marketing and PR you’ll need to do to persuade potential clients that your involvement will result in at least 33% more in damages to fund the cost. How much more? Will it justify the wait?

On the other side of the fence the happy smiling faces at Aviva & Co will be telling these unfortunate people that they could have a sensible and fair deal right now, cheque tomorrow and all that. Just cut out the lawyers. I’ve seen it at very close hand – Livin’ Aviva Loca.

Will any independent claimant lawyer really stand a chance of winning this business? Think about it. Insurers control the gateway to these claims – that’s how they’ve made so much money from referral fees for years and created the claims management companies that have brought such shame on the industry as a whole (with help from a lot of lawyers).

Motorists don’t routinely have lawyers but they must have insurance. The first or second call most make after a crash will be to their insurer. Whether it’s through them, the recovery people or the police, the third party insurers will have the victim’s details within hours if not minutes.

How many distressed accident victims will resist the instant offer of a courtesy car, an interim payment and swift handling of their claim to insist that they must first find and speak to a lawyer who is going to cost them money which they may not recover at the end of what will be an even longer day?

So you stand there, like Monty Python’s King Arthur asking a Frenchman on the battlements if his master will join you in your quest for the Holy Grail to be told “Well I’ll ask him but I don’t think he’ll be very keen…you see, he’s already got one….it’s a very nice!”

And insurers will tell you “Now go away, or I shall taunt you a second time”

The current system is broken. It will not work from here. Time for a new approach...

Aviva’s charming claims director, Dominic “Just give them a bunch of flowers” Clayden, recently renewed the call for legislation requiring claimants to deal direct with insurers who will give them a fair deal (coughs) and cut out all the unnecessary expense of lawyers.

OK – well let’s run with that – subject to a few modifications.

Nobody can argue with the ideal of a compensation procedure which sees insurers deal direct and cut the costs provided that claimants receive what they are entitled to by law. Theoretically it’s the best antidote to the twin evils of cost and delay.

The only question is whether one can trust insurers to deal fairly with unrepresented claimants and the answer is unequivocally and without any shadow of a doubt, “no”.

In principle the conflict of interest is undeniable and the temptation would be irresistible. In practice we’ve all seen the evidence so many times. See Foxes and chickens for one of the best examples of ruthless insurers prepared to rip off a naïve teenage farmer’s daughter for tens of thousands of pounds.

They can’t be effectively regulated – even if the current administration were to do anything but turn a blind eye whilst its generous sponsors plunder the plebs to bankroll their bribery. It was a rare event for the Fundamentally Supine Authority to uncover forged signatures and other deception in complaints documentation and fine Direct Lying and The Bull****dog a little over £2 million.

But such a system could be effectively monitored by the very people who have to date ensured fair play by and large and maintained some level of integrity in this otherwise very grubby industry. Yes, I do mean claimant lawyers – the real ones, not the insurer stooges.

The way to do that is simple, and I know I’m not the first to suggest it. Construct similar safeguards to those that exist in relation to compromise, or severance, agreements in the employment law arena.

Make it impossible for the defendants or their insurers to secure a legally-binding agreement unless the claimant has been independently advised on the settlement, along with other formal requirements – such that it must be in writing – as we see in s203 Employment Rights Act 1996 and mirror provisions.

But go further in prescribing an adequate fixed sum (should appeal) to cover the cost of advice, provisions for more where negotiations ensue, and outright release from fixed costs regimes where a claim proceeds and the victim recovers more than was originally offered.

What have insurers to fear? They say they’ll deal fairly with Joe Public. This model will only catch those profiteering by undercompensating innocent victims.

For lawyers there’s an attractive portfolio of a regular flow of standard fee cases with the prospect of more remunerative work if any insurers should happen to slip up and offer too little. Costs should incorporate penal elements, certainly where there are Colossal errors.

For ordinary members of the public there would be a continuing assurance that someone is there to look out for them and fight their corner if necessary, someone with the skills to challenge Goliath and win.

This, I suggest, is the line that the claimant lobby should now consider. Let go the impossible dream.

The lions share

In these dark times we can all, even lawyers, now look forward to a share of the massive reduction in car insurance prices that should follow the scything of legal costs that accident victims are allowed to recover when claiming compensation to which they are entitled.

Last week two judges ruled that the Government’s decision to cut fixed costs in “low value” road traffic claims from £1200 by more than 50%, to £500. Of course, your definition of “low value” will vary according to whether or not you’re brought up in a world where three halves make one – see Five grand.

The reduction came largely because of insurers’ scuttling away from the referral fee games that they have played on each other for years and falsely claiming that if they all promised not to rip each other off in future then the job of running a claim could still be done profitably. Well, not if it’s done competently – Peanuts.

As the High Court heard last Friday, HMG was persuaded of these fallacies in a closed meeting at Downing Street and emails between ministers and their insurer friends that were not open to any scrutiny or comment from those who represent innocent victims. Lord Justice Elias explained that’s how it’s done and “if people deem it to be unfair that is a matter for the ballot box, not the court”.

Thanks for that – and roll on 2015.

But the good news is of course that our Government agreed this treacherous deal for good reason – to save us all money in these desperate times. They were assured that the massive savings in legal costs and compensation would fund (presumably meaningful) reductions in the cost of insurance for Joe Public.

So, how is it going so far?

Well, the MD of Liverpool Victoria was reported yesterday to have warned consumers not to expect vastly reduced premiums as a result of the new fixed costs. LV’s John O’Rourke said he expected a 3% reduction in premium but said he was “not hopeful there will be much more to come”.

Hmmm. Smacks of a poor bargain, without anything else considered.

If regard is had to the announcement last month that LV’s profits last year were up (are you sitting down?) by 54% you might feel that it stinks.[1]

Meantime, Direct Lying report a modest increase of only 9% to £461million profit[2] whilst AXA UK and Ireland announced a rise of 86%[3].

3%?

An AXA director lectured me last week about what he termed “the lack of profit in motor insurance since 1994”. I asked him the secret to losing money for two decades and staying in business, and why anybody should want to stay in the business. I’ve yet to see an answer to that.

This is presumably all part of things “getting better” as our current ‘leader’ has put it today. It looks more like a bum deal to me.

3% - the price of another hammer blow to justice. Just like the greedy and corrupt bankers who have wrecked our economy and reputation with impunity, the big money of the insurance industry holds sway – behind closed doors – with the Government of our country.

As Alexander the Great may or may not have said, an army of sheep led by a lion is better than an army of lions led by a sheep.

The lions share? No, they don't.

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[1] Insurance Times 26 February

[2] International Business Times 28 February

[3] Insurance Times 21 February