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Blog: our thoughts and news

Solicitors and Legal Indemnity Insurance

 

Legal Indemnity insurance is now common place in today’s UK property conveyancing market and if you require an insurance policy you should consider using Arlington Insurance Services because as an Insurance Broker we are a professional firm regulated by the Financial Conduct Authority (FCA) whose prime purpose is to help customers find suitable cost effective insurance protection.

We work with your solicitors or legal representatives to provide the appropriate solution and we have access to a wide choice of products from various insurance markets. We can also give advice on suitable insurance protection and we will provide clear information and documentation and state the costs of the policy including any fees.

For more information about legal indemnity insurance and about how Arlington Insurance Services can help you with this please click here to view our Legal Indemnity information sheet.

5 simple ways for Accountants to protect themselves from PI claims

At Arlington we specialise in Professional Indemnity insurance for Accountants and deal with all types of firms, ranging from sole practitioners to businesses with 20 partners or more. Here, we look at the importance of documentation in not only preventing claims, but also in responding to claims should any allegations be made against a firm.

5 simple ways for Accountants to protect themselves from having PI Insurance claims brought against them.  

  1. Have a letter of engagement: your letter of engagement is crucial and will outline the scope of professional accountancy services you provide (and those you won’t). Ensure that you have a copy on file that has been signed by you and your end client. Don’t rely on the fact that you may have dealt with your client for 30 years without a letter of engagement and ‘there’s never been a problem’. Ensure that letters of engagement are regularly reviewed, updated and reissued if necessary should there be any changes to either the name of your practice or the scope of services you are providing/offering. The members’ area of the ICAEW website can provide samples of such letters.
  2. Service creep: be careful of delivering more than you are engaged to do without reviewing or amending your letter of engagement with your client. For example, if you are undertaking bookkeeping and payroll services, be clear to your end client you are not providing full accountancy services. It can lead to issues if a claim arises. We are currently dealing with a claim where an accountant was retained by a charity to undertake an annual Independent Examination. However, the charity understood this to be akin to an audit, and misappropriation of the charity’s funds was missed. Therefore ensure that your client knows and fully understands the extent of your accountancy role.
  3. Keep contemporaneous notes: keeping file notes of client interactions is so important, particularly phone notes or meeting notes. Ensure that your clients are given a copy of any meeting notes that document what was discussed, advice given and any recommendations made. PI claims usually arise years several years after professional advice was given and courts will struggle to side with the accountant if there are no documented file notes.
  4. Include a limitation of liability in your letter of engagement – ensure this doesn’t exceed your limit of PI cover and obtain independent legal advice if needed.
  5. Third party engagements: accountants often have relationships with third parties such as financial planners and tax advisers etc. Ensure that these parties also issue a letter of engagement with your client that clearly distinguishes the separate relationship and responsibilities. Ensure that your letter of engagement excludes advice performed by any third party specialist advisors.

To discuss your PI needs please don’t hesitate to contact Verena Cole on 0117 387 8880 or Anna Lloyd on 0117 387 8881 or email  pi@arlingtoninsuranceservices.com or to get a quote online click here.

Beneficial Ownership Of Overseas Entities Holding UK Property – Draft legislation published

The UK Government has published draft legislation to implement a new public beneficial ownership register for overseas entities of UK real estate, as part of its anti-corruption policy. It will go live in 2021 and will have direct consequences for the UK real estate market.

The proposed new rules follow the introduction in 2016 of the People with Significant Control (PSC) public register of beneficial owners of UK companies, and research conducted by the department for Business, Energy and Industrial Strategy (BEIS). This is a a further step towards creating transparency of ownership of UK assets by overseas legal entities.

The Draft Registration of Overseas Entities Bill (click here to see the document) is intended to force overseas entities owning UK property to name their ultimate owners on a public register or face criminal sanctions (prison sentences of up to five years) and unlimited fines if they try to sell or lease the property without first registering the beneficial owners. The rules would apply not just to overseas companies but to ‘any non-UK registered body with legal personality that can own property in its own right’.

From 2021 it will require overseas entities to register with, and provide details of their beneficial owners to Companies House before the overseas entity can be registered as the legal owner of UK land – whether commercial or residential.  The register will be publicly accessible.

The Government is inviting comments on various aspects of its draft Bill by 17 September 2018 and it is intended that the new rules will come into force in 2021.

For more information on this topic click here for a recent article by Katten Muchin Rosenman LLP. If you wish to know more about our Real Estate propositions our contact details can be found here.

Changes to the taxation of UK real estate held by non-UK residents

Nearly two thirds of real estate investors are concerned by the impact of changes to UK Capital Gains Tax (CGT) according to a report commissioned by Intertrust.

The Government has recently published its response to the consultation alongside draft legislation covering some but not all aspects of the changes to the UK taxation of capital gains realised by non-residents from disposals of UK property.

As part of the Autumn Budget on 22 November 2017, the UK Government announced significant changes to the UK taxation of capital gains realised by non-residents from direct and certain indirect disposals of UK property which will have effect from April 2019. The new rules have the potential to impact significantly on the UK tax liability of non-residents holding real estate.

There will now be a further technical consultation on the draft legislation and the Government’s proposals but it is not anticipated that the main proposals will be amended significantly before they are put in place.

It appears that the Government has listened to feedback from the initial consultation concerning various perceived problematic aspects of the original proposals but with less than a year before the implementation, non-resident investors in UK property should be considering the potential impact of these changes for their existing and planned investments and if it might be necessary to consider a restructuring of existing arrangements.

For more information on this topic click here for a recent article by Katten Muchin Rosenman LLP. If you wish to know more about our Real Estate propositions our contact details can be found here.

 

What you need to know about Islamic Real Estate Insurance

Islamic insurance (known as Takaful insurance) has been introduced as an alternative to conventional commercial insurance which is seen as violating Islamic restrictions on riba (interest), al-maisir (gambling), and al-gharar (uncertainty) all of which are in contravention of Shariah principles.

Generally a special wording is unnecessary but to demonstrate that it is Shariah compliant the wording should contain an Insurer Protocol which will demonstrate to the policyholder how the insurer complies with Shariah principals and also how it will discharge its obligations under the contract. This Protocol will usually take the form of an endorsement to the policy wording.

Policyholders agree to guarantee each other and make contributions to a mutual fund, or pool, instead of paying premiums. The pool of collected contributions creates the takaful fund. A takaful contract, like a conventional insurance, specifies the nature of the risk and period of insurance.

The fund is managed and administered on behalf of the participants by a takaful operator, who charges an agreed-upon fee to cover costs. Much like a conventional insurance company, costs include sales and marketing, underwriting, and claims management.

Any claims made by participants are paid out of the fund and any remaining surpluses, after making provisions for the likely cost of future claims and other reserves, belong to the participants in the fund and not the takaful operator. Those funds may be distributed to the participants in the form of cash dividends or distributions or via a reduction in future contributions.

Recently AXA Insurance have teamed up with Cobalt Underwriting to create a new Shariah-compliant insurance product for the real estate sector. The new product, which is available now, is an add-on to AXA’s existing real estate product. They have devised new premium payment and claims processes to ensure the product adheres to the key principles of Islamic insurance.  To see more details on the AXA product please click here.

At Arlington we specialise in Real Estate insurance and we have a team of friendly people who are immensely experienced at providing specialised risk solutions.

If you wish to know more about our Real Estate propositions, including Takaful insurance, our contact details can be found here.