Tackling Late Payments

Cash flow is critical for all businesses and their survival, especially in an already challenging economic climate.

Having identified that small businesses are often not paid promptly, or sometimes at all, for the work they do, the Labour Government is consulting on a range of new laws which will hold larger businesses to account for prompt payment practices. The consultation is expected to be launched in the next couple of months, with implementation for legislative action to flow after the end of the consultation period.

The Government is also expected to implement new rules in the next few weeks requiring large companies to include payment reporting in their annual reports, with the aim of increasing transparency of larger businesses’ treatment of smaller businesses. This sits alongside the additional reporting requirements that large businesses will have under the Corporate Sustainability Due Diligence Reporting Directive (CS3D), which we reported on in April.

Currently, company directors of large companies can face criminal prosecutions and potentially unlimited fines, however the Department for Business and Trade (DBT) has indicated that it will step up enforcement action against large companies failing to report their payment performance.

How could it impact your business?

Depending on the outcome of the consultation and legislative measures, large businesses’ contracting operations and processes will be impacted. We can expect to see a rebalancing of negotiations over price and payment terms, potentially with statutorily imposed controls included, meaning businesses’ standard contracting and operating procedures will be affected.

Crucially, larger firms’ historic payment practices and operating policies will be impacted, especially where statutory time frames for payment are imposed on businesses. Purchasing teams’ operations will be impacted, including those who regularly purchase goods and services from small businesses.

The new Fair Payment Code has been announced, which will replace the Prompt Payment Code. It is open to signatories in the Autumn, where businesses will need to prove that they have met good payment standards before being awarded official code status. The Code is designed to move larger businesses to paying faster, more often, and to shine a light on those responsible businesses paying promptly. More detail on the Fair Payment Code is shown in the article below.

Large businesses will need to include payment reporting in their annual reports, twice per year. This will mean that company boards, investors (both locally and nationally) and those accessing publicly stored records will be able to see how firms are operating.

Directors at non-compliant firms who do not report their payment practices could face potentially unlimited fines and criminal sanctions. Going further, we can expect to see intervention from the DBT taking enforcement action against non-compliant firms.

What steps should you take?

For large businesses, now is an opportune time to prepare an engagement strategy for the consultation and to consider engaging with stakeholders in their supply chains – crucially, smaller businesses who could be affected by the upcoming changes

Large business should:

• Review their current payment practices and policies;

• Develop and implement new policies and procedures tailored to smaller firms in their supply chains to demonstrate compliance (considering the new Fair Payment Code);

• Begin a review of current contracts that require reporting (alongside any reporting obligations under CS3D); and

• Seek advice on the impact of the consultation as it develops on their operations.

As the DBT has already indicated that it is prepared to take more enforcement action for failure to report properly, we can expect to see the consultation shaped around the role and powers the DBT is expected to take on, or if any other regulators will be bestowed with similar enforcement powers.

For smaller firms, this will be seen as a welcome shift in practice and can open a dialogue with the Government through the consultation to ensure that their views are heard. Smaller firms can use this as an opportunity to shift the balance of the negotiations with larger suppliers.

Addressing late payment of invoices

As stated above, the UK Government has announced plans to introduce measures to address late payment of business invoices, including the introduction of a Fair Payment Code, (replacing the current Prompt Payment Code) with effect this year.

Under the new Fair Payment Code, organisations may be awarded official gold, silver or bronze code status if they can demonstrate they have met certain payment standards i.e. Gold for companies paying 95% of their suppliers within 30 days; Silver for companies paying 95% of their small business suppliers within 30 days and all other suppliers within 60 days; and Bronze for companies paying 95% of suppliers within 60 days.

The Prompt Payment Code and the new Fair Payment Code do not impact on the requirements under the Prompt Payment Reporting Regulations which are separate. It was announced that enforcement will also be stepped up on the existing late payment performance reporting regulations which require large companies with more than 500 employees to report their payment performance twice yearly.

How could it impact your business?

The Fair Payment Code will be launched later in the year and full details of how to apply for the new Code will be made available upon launch. In the meantime, the Prompt Payment Code remains open for signatories, but will be suspended and eventually closed once the new Fair Payment Code is launched. If it is a requirement for your organisation to be a Prompt Payment Code signatory in contracts with suppliers, references may need to be changed once the scheme closes.

Large companies will already be subject to late payment reporting obligations but under new proposals, responsible directors could face criminal prosecutions including potentially unlimited fines. It will therefore be key for organisations to ensure they have processes in place to carry out their reporting obligations.

What steps should you take?

No immediate action is required in respect of either the change to the new Fair Payment Code or the Late payment reporting. However, large organisations subject to reporting obligations should review their processes on reporting on payment practices to avoid the increased enforcement powers in the case of non-compliance.

CMA’s provisional findings in the Vodafone / 3UK Joint Venture

The Competition and Markets Authority (CMA) published provisional findings in its review of the Vodafone / 3UK Joint Venture (JV) on 13 September. It warned that the JV has the potential to weaken competition in the retail and wholesale telecoms markets, leading to higher prices for customers, reduced service quality in the network and an impact on mobile virtual network operators’ (MVNOs) ability to secure competitive terms. The CMA sets out its concerns in its Provisional Findings Report, and Interested parties, such as competitors or customers of the JV parties, have until Friday 4 October and Friday 27 September respectively to submit responses to the CMA on these reports.

The CMA is expected to publish its final decision on the JV in December.

How could it impact your business?

The CMA’s provisional findings are relevant to a number of businesses. In the first instance, customers of either party to the JV and other companies operating in the telecoms market that may be impacted by the JV may wish to familiarise themselves with the CMA’s provisional findings and how it may affect their business.

On the other hand, for businesses looking to enter into a JV, this investigation by the CMA provides insight into the CMA’s review process for JVs. As we commented on in our April 2024 Horizon Scanning (Competition), the CMA has the power to investigate structural joint ventures under the merger provisions of the Enterprise Act, and if the CMA finds that the JV may result in a substantial lessening of competition (SLC), it has the power to block the JV or impose wide-ranging remedies to address its competition concerns whilst allowing the JV to proceed. Often organisations subject to investigation will propose undertakings to the CMA; a set of commitments designed to lessen the JV’s impact on the competitive process as an alternative to remedies, giving the parties to the JV greater self-determination in the process.

Behavioural undertakings (i.e. remedies that restrict the conduct of the entities involved in the JV) are rarely accepted by the CMA as they require ongoing intervention and resource from the CMA or other regulators to monitor a business’ conduct in a relevant market. However, in a somewhat unexpected move in the Vodafone / 3UK JV, the CMA has suggested the following behavioural remedies may be acceptable:

• a network investment commitment: a requirement on the JV parties to commit to investing in the network;

• time limited retail protections: allowing customers to roll-over existing contract terms (such as price, data allowance) for a pre-defined period following the JV, protecting customers from unwelcome price increases; and

• wholesale market remedies such as pre-agreed wholesale access terms for MVNOs or MVNO network capacity ring fencing.

The CMA has also not ruled out imposing structural remedies, including requiring the sale of, or access to, mobile network assets and spectrum from either Vodafone or 3UK to a new provider to enter the market as a mobile network operator (MNO) to compete with the JV and existing MNOs or blocking the JV in its entirety.

What steps should you take?

The CMA’s investigation into the Vodafone / Three JV continues to demonstrate the trend that competition authorities are primed to use their merger control powers to investigate joint ventures and transactions that could affect competition, either through the merger control powers under the Enterprise Act 2002 or its powers under Chapter 1 of the Competition Act 1998.

If your business is considering a joint venture, it is important at the outset to determine how the joint venture will be structured, and how the JV will be compliant with competition law. Engaging competition advice at the outset of a joint venture can ensure that compliance is baked into the arrangement and prevent compliance issues in future – including at termination of the JV.

Even where organisations do not intend to create joint ventures, they should beware “strategic partnership agreements” or “collaboration agreements” may inadvertently create joint ventures, and ensure such agreements are assessed for competition compliance. It should also be noted that even when the parties to an agreement do not have “equal shares” it is still possible to create a joint venture.

If you believe that your business may be impacted by the Vodafone / 3UK is affected by the JV, or are interested in commenting on the provisional findings, please reach out to our competition team to discuss submitting comments to the CMA.

CMA consumer enforcement guidance and enforcement priorities

The Competition and Markets Authority (CMA) has published its ‘Direct consumer enforcement guidance and rules’, setting out how the CMA will exercise its direct enforcement powers under the Digital Markets, Competition and Consumers Act 2024 (DMCC) which will come into force in April 2025.

Under the DMCC, the CMA will gain the ability to directly enforce consumer law through its internal enforcement procedure, including in relation to all consumer contracts for the sale of goods and services, cancellation rights, unfair contract terms, bespoke consumer law rules for package travel, consumer credit and even secondary ticketing.

The guidance released by the CMA, which is currently under consultation, irons out the precise details of how the new regime will apply in practice. In short, the CMA’s current powers for direct enforcement under competition law will extend to include consumer law infringements, including:

• strengthening of the CMA’s information gathering powers, allowing the CMA to conduct dawn raids for consumer enforcement, and request information;

• fines and other penalties for false or misleading information given during an investigation;

• a process for undertakings and settlement of consumer law investigations; and

• a host of remedies appropriate for consumer law enforcement, including enhanced consumer measures, and fines of up to 10% group worldwide turnover.

How could it impact your business?

Although many of the consumer law rules that will come into direct enforcement under the DMCC have been in force for a number of years, there has been a poor track record when it came to enforcement. As a result, for many organisations consumer law compliance has fallen down the list of priorities, behind data protection and other regulatory compliance. The direct enforcement regime will bring with it a wave of enforcement action in consumer law, which is likely to catch a number of organisations for more obvious practices such as drip pricing, green claims and urgency claims, but we also expect more enforcement action against unfair commercial practices; an area which is still largely unexplored in case law, and is likely to lead to some unexpected judgements – particularly in relation to discount claims.

The guidance will therefore arguably have the largest impact on internal compliance teams and general counsel, who will need to consider developing and implementing robust internal policies and procedures that are reflective of the DMCC and the consumer enforcement guidance, including sector specific guidance issued by the CMA from time to time.

Marketing and design teams will also need to reflect on their current practices to ensure that the company’s brand understanding and alignment promotes consumer protection and is not at risk of being criticised by the CMA for presenting a misleading image.

Businesses must be made aware that although the consumer provisions of the Act are due to come fully into force in April, any suspected infringement behaviour taking place currently which could be at risk of being deemed as an infringement of consumer rights, can be caught by the provisions even prior to their implementation. Although the CMA cannot give retrospective fines, the CMA will take such previous behaviour into consideration if an investigation is raised, and fines or undertakings are issued. In short, the journey to compliance should start now.

What steps should you take?

In the first instance, businesses should seek to understand how their company processes work for consumers, following through the customer journey from start to finish and assessing each stage for compliance. In particular, assessing the following:

• How the company website appears to the consumer (including assessing dark patterns and online choice architecture).

• How the business is marketed to the consumer, does the business present an accurate picture of its brand (particularly in relation to environmental and ESG practices)?

• Are pricing practices in line with CMA guidance, particularly in relation to discounted products, drip pricing and urgency claims?

• - How the purchase process looks for the consumer: are the terms fair? Are subscription practices complaint with the DMCC?

• The cancellation, returns and refund process for the consumer, ensuring that any subscription services are at least as easy to cancel as they are to enrol in.

Businesses should also engage in compliance training to ensure that their teams are fully up to date with the changes to the enforcement in consumer law, and recent developments in the law itself, to avoid falling foul of the potentially severe sanctions in the DMCC.

Reporting on Payment Practices and Performance Regulations 2017

The Reporting on Payment Practices and Performance Regulations 2017 (as amended) require large companies and LLPs in the UK to report on their payment practices, policies and performance. Failure to do so can lead to reputational damage and (being a criminal offence) fines for the company and directors and in severe cases, custodial sentences.

The requirement to report is by reference to certain criteria, one of which is the “balance sheet total” (the others being turnover and employees). The Department for Business and Trade recently provided guidance on what constitutes a company’s "balance sheet total”, as being the total of its fixed and current assets. The thresholds and other qualifying conditions are contained within the Companies Act 2006.

How could it impact your business?

Companies previously falling within the “medium” sized category may now be classed as “large” if, by virtue of the guidance, their balance sheet total exceeds £18m (and they exceed other thresholds). These companies may inadvertently be in breach of the Regulations and, as mentioned above, there are sanctions for non-compliance.

What steps should you take?

Companies should review their balance sheets to ensure compliance with this updated guidance, especially if they are on the cusp of the medium-sized classification.

Thresholds are periodically updated. When companies are considering if they are in scope of the reporting requirement for a financial year, they should bear in mind that revisions to Companies Act thresholds in that financial year may be applied retrospectively to the preceding two years for the purpose of the reporting requirement size tests.

Companies required to report on payment practices must do so bi-annually on the Government’s website.

Cyber-security and data breaches – ‘It’s not if, it’s when’

Cyber-security remains a hot topic, with threats evolving continuously.

The Electoral Commission have recently been issued a reprimand by the Information Commissioner’s Office (ICO) for failing to have in place appropriate technical and organisational measures. The failing meant that a threat actor was able to access personal data on the Electoral Register of approximately 40 million individuals, via unpatched software vulnerabilities.

The ICO has since announced it has signed a memorandum of understanding with the National Crime Agency (NCA). The two organisations intend to cooperate to ‘improve the UK’s cyber resilience’ and provide up to date information and guidance to support UK organisations with improving their cyber-security regimes.

How could it impact your business?

Whilst the Electoral Commission incident was large scale and related to a governmental body, it serves as a stark reminder of the importance of maintaining cyber-security and the potential consequences where things go wrong.

Threats such as these are increasingly prevalent and the ICO and NCA partnership perhaps indicates an increased shift towards treating these incidents as criminal behaviour.

A regular review of cyber-security measures is vital to protecting your business and the personal data of customers and staff. Even businesses whose core activities are not personal data focused (such as those supplying solely to other businesses) will likely hold significant personal data on their employees – some of which will be sensitive (financial information, identity documents, health information in connection with absence management etc) and therefore valuable to cyber-criminals.

What steps should you take?

An ICO report earlier this year indicated the 5 leading causes of cyber-attacks to phishing, brute force attacks, denial of service, errors and supply chain attacks.

The unfortunate position for many businesses is that, when it comes to cyber-attacks, ‘it’s not if, it’s when’. Prevention is always cheaper than the cure with these matters, as a failing in this space could lead to regulatory enforcement action (including potential financial penalty) as well as direct claims for compensation, along with reputational damage and of course the cost of containing the incident and restoring the data.

Businesses are advised to keep abreast of latest guidance and trends to ensure they protect their systems insofar as possible to known threats and risks. The expected ICO and NCA collaborative guidance and resources will hopefully prove invaluable in this regard, and we intend to provide further updates once these are published. In the meantime, current resources are available here.

Property (Digital Assets etc) Bill

This month, a proposed Bill from the Law Commission seeks to redefine ‘personal property’ under English law to include digital assets such a cryptocurrency and online tokens. If implemented, a new category of intangible personal property will be created to encompass this current and emerging digital property.

How could it impact your business?

Given that both professionals and lawyers alike largely already consider digital assets to be ‘property’, the practical impact of such proposed changes should be limited. In fact, the existence of this discrepancy may come as a surprise to many, and a sign that the law lags some way behind market trends. Nevertheless, if implemented, the Bill will align digital assets more completely with current legislation, allowing it to interact with established law in such areas as insolvency, bankruptcy, unlawful interference, and succession on death.

What steps should you take?

With the changes not yet implemented, no immediate action is required. However, professionals and businesses alike would be wise to regard these relatively academic proposals as a foundation for more systemic change regarding digital assets to arise in the near future.

The Employment Rights Bill: Shaking It Up

The Employment Rights Bill represents one of the biggest changes in direction to employment law we have seen in many years. The Labour Government’s proposals aim to rework the UK’s employment law framework in some fundamental ways. Labour said that they would introduce legislation to effect these changes, “within 100 days of entering government” (by mid-October).

It is important to remember that this doesn’t mean the law will change automatically on this date. Instead, this date refers to when the Government has promised to introduce the Bill. The Bill still has (what is likely to be) a lengthy journey to go on before it then becomes law.

The ‘journey’ involves various readings, debates and votes from the House of Commons and House of Lords. Part of this process includes a committee of MPs who will go through the Bill with a fine-tooth comb and make amendments/rejections. Only once the two Houses are agreed on the form and contents of the Bill will it then go to the King for the final stage (Royal Assent).

How could it impact your business?

Realistically (but without our crystal ball) we expect that it may take up to a year for parts of the Bill to become law.

The Government has pledged to make unfair dismissal a ‘day 1’ right, rather than employees waiting (as at present) for the qualification period of two years. However, it is also important to keep a careful eye on legislation changes, as it is possible some key aspects of employment law could be quickly changed. For example, the Government already has the power to change the qualifying period to claim unfair dismissal under the Employment Rights Act 1996.

By way of reminder, here are some other headlines of the further changes Labour has promised (to look out for from October onwards):

• Abolishing zero-hour contracts: workers on zero-hour contracts will be entitled to a contract which will detail the number of hours they regularly work and ensure that any changes in working patterns are communicated within a reasonable notice period.

• A ban on dismissal and re- engagement (also known as fire-and-rehire) practices: employers will no longer be able to dismiss an employee and re-engage them on less favourable terms. The law will replace the statutory code that was introduced in the early part of this year.

• Flexible working becoming a default right: employees will now have a day-one right to work flexibly. An employer will be required to accommodate this as far as reasonable, and any reason why they cannot accommodate flexible working for an employee will need to be clearly communicated.

• Removal of the lower earnings limit on statutory sick pay: statutory sick pay will be available to all workers, and the three-day waiting period shall be removed.

• There will be a ‘right to disconnect’, likely to require employers to review their working practices and protect employee downtime.

What steps should you take?

It is important to remember that there will be some time between any Bill being introduced and it becoming legislation. In the meantime, businesses can be thinking about how they would engage with the proposals detailed above, for example, employees can be thinking now about the options for protecting worker downtime and start to think through what any changes might mean for their organisation.

Supporting disabled workers with hybrid working

On 5 September 2024, the EHRC published guidance for employers on supporting disabled workers with hybrid working (the Guidance). The Guidance sets out the benefits of hybrid working for employers and disabled workers. It follows a clear structure which managers and leaders could follow, aimed at creating an open dialogue between employers and disabled workers and with a view to increasing the effectiveness of hybrid working in the workplace.

The recommended structure includes:

1. Identifying barriers to effective hybrid working;

2. Identifying adjustments to overcome these barriers;

3. Implementing the adjustments; and

4. Reviewing the adjustments.

Both the law surrounding disabled workers and practical tips are covered in the Guidance, with detailed case studies highlighting different disabilities and working environments, alongside the structure to provide some further insight. There are also questions and talking prompts for employers to consider when engaging in (potentially) sensitive conversations with disabled workers on this subject.

How could it impact your business?

The Guidance provides more detail than before on how employers should approach hybrid working and the level of support you should provide to your disabled workers, starting from the recruitment process and continuing throughout the employment. It is intended to be read alongside the EHRC Guidance on workplace adjustments and pre-employment health questions.

Whilst not legally binding, it is likely that the Employment Tribunal would consider elements of the Guidance as “good practice” or reasonable steps for employers to take when dealing with disabled workers and hybrid working Therefore, this could be relevant for businesses wanting to take positive action to avoid discrimination claims.

What steps should you take?

Employers should review their internal policies and procedures in light of the Guidance and ensure their workforce is sufficiently aware and regularly trained on how to support disabled workers with hybrid working. Directing staff to the Guidance itself might prove useful, given the practical suggestions.

‘Anti-Islamic English Nationalism’ – a protected belief under the Equality Act 2010?

In the recent case of Mr S Thomas v Surrey and Borders Partnership NHS Foundation Trust and Ms A Brett, the Employment Appeal Tribunal considered whether anti-Islamic English Nationalism could be a protected belief under the Equality Act 2010 (“EqA”).

The Claimant worked as a consultant to the NHS until he was dismissed for failing to disclose an unspent conviction. He subsequently issued a claim for discrimination based on religion and belief, as he alleged that the real reason for the dismissal was his close and public affiliation with the political party, the English Democrats. The Claimant stated that his views were that every person living in England should adopt an English national identity. The Respondent refuted this and argued further that the Claimant’s views are not capable of protection under the EqA.

As the claim progressed, it became apparent from the evidence that the Claimant’s opinions were more extreme than he initially presented – his views were anti-Islamic at heart and included ideas such as forcibly deporting all Muslims from England.

The Employment Tribunal used the so-called Grainger criteria (below) to decide whether such views were too extreme to warrant protection under the EqA.

Briefly, Grainger says:

• Any protected belief must be genuinely held.

• It must:

  • be a belief and not an opinion or viewpoint based on the present state of information available;

  • be a belief as to a weighty and substantial aspect of human life and behaviour;

  • attain a certain level of cogency, seriousness, cohesion and importance; and

  • be worthy of respect in a democratic society, not be incompatible with human dignity and not conflict with the fundamental rights of others.

Importantly, the Tribunal found that English Nationalism could be a protected belief, but the Claimant’s anti-Islamic views were sufficiently extreme that the final element of the Grainger criteria could not be satisfied; as his views conflicted with the fundamental rights of others.

The Claimant appealed on multiple grounds, however, the Employment Appeal Tribunal upheld the decision and stated that “the Claimant's views are of an English nationalism which believes that there is no place in British society for Muslims or Islam itself” and to uphold the Claimant’s extremist views as a protected belief would be an infringement of Article 17 of the European Convention of Human Rights which prohibits the abuse of rights.

How could it impact your business?

This case is another development in the highly contested area of beliefs which are afforded protection by the EqA. Previously, the caselaw has applied a relatively low bar to protection. This case helps to define the limits of which beliefs will now be protected because they are in conflict with the fundamental rights of others.

What steps should you take?

Employers are aware that most employees have varying political views, and this case is an important reminder that there is a balancing act between treating views with respect but being vigilant to any views which tip over into radicalism or infringing the fundamental rights of others.

Our suggestion for employers is to check that any Equality and Diversity policies are up-to-date and make it clear that you are committed to promoting an equal and inclusive workplace, with a clear method to report the instances should they arise. Providing training to your workforce regarding beliefs and how to approach them at work is essential. It is also worth noting that the Tribunal used the Claimant’s social media as one of the determining factors for his true beliefs, so a review of your Social Media policy and sending a reminder to employees about acceptable use of social media would be prudent.

Green Marketing and Consumer Law

The Competition and Markets Authority (CMA) has written to 17 of the UK’s largest fashion retailers warning them that their Green Claims are not compliant with consumer law. Alongside the letters, the CMA has issued new guidance for fashion retailers based on the Green Claims Code – setting out how organisations making claims regarding their environmental credentials can do so in a way that is compliant with consumer law.

Whilst the guidance is specifically tailored to the fashion sector, it is relevant to all businesses using their green credentials to market to consumers. The guidance is also relevant to manufacturers, suppliers (including third-party branded suppliers), wholesalers and distributors and provides a significant insight into the CMA’s expectations and what it considers best practice in relation to Green Claims.

How could it impact your business?

For businesses that utilise Green Claims in marketing or labelling, the new guidance is a timely reminder to review the compliance of their existing claims. The guidance released by the CMA comes just over six months before the CMA’s new direct enforcement powers for consumer law (mentioned above) come into force in April 2025. These powers not only give the CMA the ability to expedite consumer law enforcement using its internal enforcement procedure, but also the capability to fine organisations up to 10% of group worldwide turnover for a breach of consumer law.

Businesses’ communications, marketing and labelling policies therefore will come under scrutiny, with the guidance recommending that where businesses make Green Claims they should be:

• clear, accurate and give complete information about their products;

• backed up by robust, credible and up to date evidence;

• clear where the claim relates to a specific part of a product’s lifecycle;

• based on specific criteria to decide which items are “green” and set out any minimum requirements, alongside not labelling products as part of a “green” range unless they meet the criteria;

• specific when using filters or navigational tools to search for green products (especially where businesses are using websites to sell products); and

• only making comparisons in a fair manner and displaying the comparative information.

The guidance requires businesses to go further and review Green Claims made in their supply chain, in particular in respect of final scope certificate and final transaction certificates, showing interesting parallels with the Supply Chain Due Diligence Directive in Europe (read our summary here).

However, both this guidance and the Green Claims Code represent a divergence from the EU’s Green Claims Directive as, at this stage, the UK does not require assessments or verification of Green Claims by independent third parties. The Green Claims Directive, on the other hand, demands that businesses interacting with the EU market receive third-party verification for green claims, which could impact unified marketing and advertising campaigns. Read our summary of the Green Claims Directive here.

What steps should you take?

The CMA’s guidance and written warnings to the 17 fashion retailers are a clear signal of intent. The CMA has indicated in its strategic priorities that Green Claims are an area of focus for the regulator over the coming year, and we expect to see the CMA take action in relation to misleading green claims across all direct-to-consumer sectors including aviation, retail, fast-moving-consumer-goods, travel, leisure and hospitality. The risk associated with making misleading Green Claims has exponentially increased as a result of the Digital Markets, Competition and Consumers Act, and in-house teams should ensure that they have visibility and oversight over claims regarding green credentials that may be made across the business.

Businesses making Green Claims should review their Green Claims across all mediums, including websites, advertisements, and those embedded into their products and accompanying labelling to ensure that they are accurate and do not mislead consumers. The CMA recommends looking at Green Claims through the eyes of the consumer and whether it presents a true and honest picture of the business’ green credentials.

For businesses trading with the EU and subject to the Green Claims Directive, in-house teams should seek training on the differing regimes and ensure that any Green Claims comply with the relevant regimes, aiming to reduce the risk of double jeopardy.

Patent Box - Overview

According to recent UK Government statistics, there are now fewer companies benefiting from Patent Box, a tax incentive to encourage companies to develop and commercialise intellectual property (IP) in the UK, than in previous years. However, those who are benefiting are saving more Corporation Tax than ever before.

How could it impact your business?

Eligible companies can apply a lower rate of Corporation Tax (10%) to profits earned from patented inventions.

To be eligible, companies must either:

• Create or contribute a significant amount to the creation of the invention; or

• Perform a significant amount of activity in developing the invention (this includes use/ application of the invention).

Specific requirements for using Patent Box are that the company:

• is liable to Corporation Tax;

• makes a profit from exploiting patented inventions;

• owns or has exclusively licenced-in the patents;

• has undertaken qualifying development on the patents.

What steps should you take?

You must elect to benefit from the reduced rate of Corporation Tax that applies to the Patent Box within two years from the end of the accounting period which the relevant profits arose.

There is no specific form which must be used and instead, an election can be made in the calculations accompanying your Company Tax Return or separately in writing.

HM Land Registry fees increase

The Land Registration Fee Order 2024 and the Land Charges Fees Rules 2024 were made on 9 September 2024 and will come into force on 9 December 2024.

How could it impact your business?

From 9 December 2024, the fees for services such as obtaining title registers, title plans and other documents, and submitting priority searches electronically will increase by £4. This means that the costs of such services will generally increase from £3 to £7.

This is the first costs increase for such services for over 10 years and has been implemented to reflect the increased costs associated with running and improving the service provided by HM Land Registry. The boost in revenue from the increased fees also forms part of the plans to increase digitalisation and transformation of data. It is hoped that investment in the digitalisation of services will assist in reducing the backlog of applications.

What steps should you take?

If you have a property portfolio, or other large-scale projects in the pipeline which require a thorough title review, it may be worth commencing the review of the title and gathering of land registry documents prior to 9 December to avoid the increase in fees.

Product Regulation and Metrology Bill

The Product Regulation and Metrology Bill was announced as the Product Safety and Metrology Bill in the King's Speech of 17 July 2024. The Bill was positioned as legislation which would update product safety law and help enable the UK to keep pace with technological advances such as AI while also maintaining an equitable landscape.

The Government intends to address ‘modern day safety issues ‘ which include ensuring a level playing field between high street and online market places. Among other things, the Bill was intended to clarify the role of online marketplaces in product safety, particularly where they are used to place non-UK products on the UK market.

The Bill published in the House of Lords on 4 September 2024 provides for the Secretary of State (SoS) to make secondary legislation on the marketing or use of products in the UK to reduce or mitigate risk, ensure they operate efficiently or effectively, and ensure they weigh and measure accurately. “Risk” is defined as when the intended use of a product under reasonably foreseen conditions could endanger health and safety, property or cause or be susceptible to electromagnetic disturbance.

The Bill as published defines a "product" as a tangible item that results from a method of production and does not currently broaden the scope of product safety legislation to cover intangibles such as software. Certain products (including food, plant and animal products, aircraft military equipment and medicines and medical devices) are excluded in Schedule I.

The substantive content of the legislation will only come when the SoS exercises the powers conferred to create new laws on product requirements, use, marking, and marketing and around technical standards. This includes placing obligations on manufacturers, marketers, importers and online marketplaces.

There is also scope to introduce an enhanced enforcement regime and information sharing practices.

How could it impact your business?

Alignment with the EU's General Product Safety Regulation (EU) 2023/988 (GPSR), which will apply in the EU from 13 December 2024, is said to be a priority for secondary legislation. The ability to align with EU law in certain respects will likely be welcomed by cross-border businesses to preserve regulatory stability and maintain single supply chains across the UK and EU.

Timelines for these changes are unclear and the developments should be kept closely under review. Although the Bill is likely to pass relatively quickly, it remains to be seen what secondary legislation will emerge under the powers given to the SoS and when these are likely to apply.

The Bill may repeal Parts 2, 4 and 5 of the Consumer Protection Act 1987 (CPA 1987) which relate to consumer safety, enforcement, and miscellaneous provisions, respectively. As such, the provisions of Part 1 of the CPA 1987 on product liability appear to be unaffected by the Bill and we will wait to see whether it will also update the UK's strict liability regime in due course.

What steps should you take?

The Bill has fourteen specific clauses and in considering the steps to take in preparation you should consider each of their implications.

The key take away points are that businesses should:

• mitigate risks where possible;

• undertake efficient risk assessments;

• ensure records are kept and updated; and

• train staff on efficient and effective operations to tackle any non-compliance appropriately.

New enforcement powers

From 10 October 2024 powers come into effect in the UK for the civil enforcement of breaches of aircraft, shipping and trade sanctions pursuant to the Trade, Aircraft and Shipping Sanctions (Civil Enforcement) Regulations 2024. Penalties of up to GBP 1 million, or 50% of the value of breaches on a strict liability basis can be imposed (and now mirrors the penalties for breaches of financial sanctions). There are also new reporting obligations.

How could it impact your business?

This will apply to all UK persons, including businesses, wherever they are in the world. The powers will be exercised by the long-awaited new agency, the Office of Trade Sanctions Implementation (OTSI), alongside the DfT and HMRC (who will retain certain investigation and enforcement roles).

OTSI will be able to impose penalties on a strict liability basis, meaning that you will be liable even if you had no knowledge or reasonable cause to suspect a breach. It is therefore important that the impact that trade sanctions may have on your business is consistently re-evaluated.

New reporting requirements also introduce a mandatory obligation on certain “relevant persons”, including providers of legal and financial services, as well as others within the shipping and aviation sectors, to report actual or suspected breaches to OTSI (with a failure to comply resulting in a possible civil penalty or criminal prosecution). This will increase the number of disclosures and so will provide a valuable source of information to OTSI that may trigger proactive investigations.

OTSI will also have the power to publish information about a breach of sanctions, not only where a civil monetary penalty has been imposed but even where no formal action has been taken.

What steps should you take?

Whilst these changes do not substantively alter the sanctions that the UK has imposed, they send a clear signal that the UK Government is now focused on ensuring compliance and we can expect changes to the enforcement landscape going forward. It is therefore important to review, and where necessary enhance, trade sanctions compliance. There are significant penalties for failing to comply and a defence that you did not know, or have reasonable cause to suspect a breach will no longer get you off the hook.