e-invoicing consultation

HMRC and the Department for Business and Trade have published a consultation regarding e-invoicing.

e-invoicing should be distinguished from digital invoicing, which usually involves a PDF or Word file that is easily understood by humans. An electronic invoice (e-invoice) is a data file that is transferred between computers and not easily understood by humans.

At present there are no standards setting out the form, application, or file delivery of e-invoices, other than for suppliers to the NHS. However, as many other countries are adopting or even mandating e-invoicing, UK based businesses may already need to engage with these.

The consultation is seeking views on the required data any UK standards industry wishes to see. In particular, they request opinion on whether to focus on decentralised models and the impact this would have.

How could it impact your business?

At present no legislation is anticipated. However, organisations should keep up to date with any developments in relation to e-invoicing overseas as a guide to any future changes in this area.

If e-invoicing is mandated in the UK, the impact on businesses will be significant, both in terms of benefits and challenges. Benefits include the efficiency and accuracy of automated processing, which will lead to quicker invoice reconciliation, faster payment and improvements in cash flow. Additionally, the regulatory framework will reduce the risk of VAT fraud and compliance errors.

However, there will be implementation costs to consider; system integration in particular may require costly upgrades.

What steps should you take?

The consultation closes on 7 May 2025. We will monitor the outcome of the consultation and provide updates as and when appropriate.

Anti-slavery due diligence in supply chains

In our update last October, we reported on the House of Lords Select Committee’s report on the Modern Slavery Act 2015. The report recommended introducing legislation requiring large organisations (i.e. those with an annual turnover of £36 million) to carry out compulsory modern slavery supply chain due diligence. It also suggested introducing an enforcement body, which would act as a single point of contact for labour exploitation across the UK labour market.

The Independent Anti-Slavery Commissioner has now published a strategic plan for 2024 – 2026 recommending mandatory due diligence into human rights abuses in commercial supply chains.

How could it impact your business?

If followed by the government, the plan would require businesses to sufficiently investigate their supply chains to ensure they do not benefit from forced labour. The plan will be of particular significance to those companies with global supply chains, and those engaged in jurisdictions or in industries at high risk of human rights abuses.

What steps should you take?

No response from the government has yet been released.

Large organisations should keep ahead of developments, investigating and understanding their own supply chains through the use of diligence questionnaires backed up by modern slavery policies to ensure a smooth transition once changes arrive.

Consumer Law New Regime - 6 April 2025

The key consumer law aspects of the Digital Markets Competition and Consumers Act 2024 (“DMCC”) are set to come into force from 6 April 2025.

The CMA has published final guidance on how it will exercise its direct enforcement powers, and the Chief Executive of the CMA has provided some further commentary on what to expect, and how the CMA will approach the new regime. It is important that consumer businesses are fully prepared for the new provisions about to come into force, and are aware of the enforcement action which may be taken for non-compliance.

How could it impact your business?

Sarah Cardell, Chief Executive of the CMA, recently delivered a keynote speech regarding the CMA’s approach to its new consumer powers. The speech focussed on two key areas:

Drip Pricing

This relates to the practice of showing consumers an initial price for goods or services, whilst additional fees are then revealed (or “dripped”) later in the purchase process.

The CMA has indicated that it intends to approach this area in phases once the DMCC comes into force. It acknowledged that these provisions cause significant uncertainty in certain sectors (such as drip pricing practices within fixed term periodic contracts, alongside in relation to property contracts), and so intend to run a further consultation on these areas later in the year.

In the meantime, the CMA has confirmed that it will only take enforcement action against drip pricing practices which clearly breach the guidance to be released in April. This will mean prohibition and enforcement against drip pricing which is already well understood and due to remain unchanged.

Fake Reviews

The CMA has noted that whilst it is already able to tackle fake reviews as a malpractice, it recognise that the new provisions set out in the DMCC may necessitate updates to systems and processes. Therefore, for the first three months of the regime, the CMA will focus more on supporting businesses to encourage compliance, rather than proceeding directly with enforcement action.

Updated guidance and next steps

On 14 March 2025, the CMA published the final version of its guidance (“CMA200”) on how it will exercise its powers under the DMCC. Whilst we have discussed the changes to enforcement in our previous horizon scanning articles, the headline remains the same: as of 6th April, the CMA will have direct enforcement powers in relation to a vast array of consumer laws – meaning faster enforcement with more severe penalties.

What steps should you take?

The CMA has noted that whilst the majority of the law on which it will now be able to take new direct enforcement action has not changed materially, the risks associated with non-compliance will become more severe and more direct, due to the penalties within the CMA’s arsenal. The CMA has therefore confirmed that a phased approach will be taken towards some practices, such as drip pricing and fake reviews. Initially, enforcement action will only be taken against the most “egregious breaches”. The CMA has provided examples of such breaches as being those which include “aggressive sales practices that prey on vulnerability; providing information to consumers that is objectively false; and contract terms that are very obviously imbalanced and unfair.”

Regardless of this, businesses should be urgently ensuring compliance with the new regime without any delay. Whilst the CMA has appeared to suggest some initial leniency and further time for businesses to update their practices, it is important to ensure compliance as soon as possible, given the severe enforcement penalties which remain open to them should they decide to take action. Please contact our Competition and Consumer team for more information.

Improving the Ethnic Diversity of UK Business

The Parker Review (the “Review”) is an independent framework established in 2015 to promote ethnic diversity on UK business boards. In March 2025, the Review published its latest report which details the progress made and the new targets it has set for UK businesses.

Highlights from the report include:

• 95% of FTSE 100 companies, 82% of FTSE 250 companies and 48% of private companies reported at least one ethnic minority director.

• Board directorships in 19% of FTSE 100 companies, 15% of FTSE 250 companies and 13% of private companies were represented by ethnic minority directors.

• The average percentage of ethnic minority representation in senior management was found to be 11% in FTSE 100 companies, 9% in FTSE 250 companies and 9% in private companies.

The report set a new target for the proportion of ethnic minority representation in senior management in 2027 to reach 15% for FTSE 100 companies, 13% for FTSE 250 companies and 13% for private companies.

A shift in focus
Previously the Review’s reports have heavily focused on achieving numerical representation of ethnic minorities, however, the emphasis has shifted. The committee is now looking at the quality of representation, not just the numbers, and the actual impact these appoints are, or are not having. It is no longer sufficient to simply appoint individuals. The review calls for demonstrable leadership, active participation in strategic decision-making, and evidence of a genuine pipeline of diverse talent throughout the organisation (not just at board level).

How could it impact your business?

The Review emphasises the importance of accurate and transparent reporting on ethnic diversity within UK businesses. While the Review does not impose legal obligations, it reconciles with upcoming regulations and best practices that employers should consider, including:

• Mandatory ethnicity pay gap reporting: the UK Government plans to require companies with over 250 employees to annually disclose their ethnicity and disability pay gaps. This measure aims to identify and address disparities, promoting greater pay equity.

• Transparency in diversity data: companies are encouraged to ensure that at least 80% of their workforce self-identifies ethnically. They are also encouraged to publicly report on this percentage.

This shift towards diversity representation and transparency can directly affect your business’s reputation going forward. Failure to demonstrate real progress could lead to:

• Reputational damage: a lack of demonstrable progress can lead to negative public perception, impacting your business’ appeal.

• Investor pressure: investors and customers are increasingly linking ESG factors (environmental, social and governance), including diversity, to their decision-making processes.

• Restricted recruitment: top talent, especially from diverse backgrounds, will gravitate towards companies with strong diversity records. Lack of diversity can hinder a business’ ability to attract top talent, especially at a time where recruitment is one of the biggest challenges a growing business can face.

What steps should you take?

What can you do:

• Implement a diversity and inclusion strategy for board appointments and beyond.

• Focus on developing diverse talent pools at all levels and provide the necessary tools for progression.

• Conduct regular evaluations that assess the quality of contributions from all directors.

• Establish transparent reporting mechanisms to track progress and ensure accountability.

When:

• Businesses should commit to having at least one director from an ethnic minority background on their main board by 2027, as per the Review’s updated target.

• Begin by conducting an internal audit of your:

  • current diversity and inclusion practices;

  • progression plans for existing employees.

• Set clear, measurable targets and timelines.

• Initiate leadership development programs that appeals to diverse talent.

By taking these actions, businesses can align with the Parker Review's recommendations, creating more diverse, equitable, and inclusive leadership teams across the UK business landscape.

Proposal to extend to UK adequacy tied to proposals for reform

On 18 March 2025, the European Commission announced its intention to extend the two 2021 adequacy decisions regarding the United Kingdom for a period of six months. The extension would allow the free flow of data between the EU and UK to continue until 27 December 2025.

The decision appears to be linked to the ongoing legislative process regarding the UK’s Data (Use and Access) Bill ("Data Bill"). The Commission has stated that it will assess the new legal framework, and decide upon its adequacy, once the process has concluded.

How could it impact your business?

If approved by the European Data Protection Board, the extension will be significant for all UK and European businesses currently relying upon the UK adequacy’s status to validate the import of personal data from the EU. In essence, the extension will buy businesses time before contractual and policy amendments need to be considered. This is because the UK data protection rules that were found adequate in 2021 will remain in place and continue to apply to data transferred from the EU until December.

That said, if the reforms proposed under the Data Bill (once finalised) are not viewed favourably by the EU, there is a risk the UK’s adequacy status may be revoked.

What steps should you take?

In line with our previous updates regarding the Data Bill, UK and EU businesses will want to keep a close eye on its continuing passage through Parliament.

The Data Bill has cleared the Committee Stage, which saw numerous non-government amendments proposed by the House of Lords rejected, including those relating to copyright and AI. It has now returned to the Commons for Report Stage and Third Reading. Members of the UK Government have publicly commented that they expect the Bill to become law in the coming months and do not expect it to impact the UK’s adequacy status. However, many legal commentators do not expect the Lords to simply wave through the Commons’ amendments, despite their majority in Government.

What is clear is that the Data Bill will need to pass muster not only in the House of Lords, but at European level as well, if businesses are to continue benefiting from the good relations the UK currently enjoys because of its high privacy standards.

Businesses should continue to monitor developments and be prepared to pivot their current transfer mechanisms, should the reforms proposed within the Data Bill have unintended consequences.

Increases in employment costs in April 2025

April 2025 is set to be an expensive month for employers, with a number of increases in employment costs coming all at once. We will see changes to the main rate of National Insurance that employers pay on wages, together with increases in the National Minimum Wage. Employment Tribunal Limits are also being revised.

Increase in “Secondary Class 1” National Insurance

Employers and employees both pay national insurance on wages. These are known as “Class 1” contributions and apply to wages over a certain threshold.

From 6 April 2025 there will be an increase to the employers’ (“Secondary Class 1”) rate. It will increase by 1.2% from 13.8% to 15%. At the same time, the threshold at which that 15% rate kicks in will reduce from £9,100 to £5,000.

These combined changes will add significantly to payroll costs - adding £866 to the cost of hiring an employee on a £30,000 per year salary. It is anticipated that the change will net the Treasury an additional £23.7bn in its first year.

A full rundown of the changes to the NI limits can be found here.

National Minimum Wage

As a reminder on terminology, the National Minimum Wage’s top rate for those 21 and over, is referred to as the “National Living Wage”.

From 1 April, the National Living Wage will increase from £11.44 to £12.21 per hour (amounting to a 6.7% increase). For younger workers the increase is even greater, with those in the 18–20 year old bracket seeing an increase to £10.00 per hour (a 16.3% increase).

The combined financial implications for employers who have large numbers of staff at or near the National Minimum Wage/National Living Wage (when added to the National Insurance hikes above), will be very significant.

In an effort to support smaller employers, the Government will be increasing the Employment Allowance from £5,000 to £10,500 and removing the upper £100,000.00 threshold.

Tribunal Compensation Limits

From 6 April, Employment Tribunal Compensation limits and other statutory payments, including statutory redundancy pay are increasing.

The new rates from 6 April 2025 are as follows:

• Statutory “Week’s Pay” (Used for calculating various awards, including statutory redundancy pay and unfair dismissal basic awards) is increasing to £719 from £700

• Maximum Statutory Redundancy Pay is increasing to £21,570 from £21,000 

• Maximum Basic Award for Unfair Dismissal is increasing to £21,570 from £21,000

• Maximum Compensatory Award for Unfair Dismissal is increasing to £118,223 from £115,115

• Statutory Guarantee Pay is increasing to £39 from £38

What steps should you take?

Whilst businesses will, most likely, already be aware of the above changes, it is important to review current renumeration practices, including payroll contributions, to ensure continued compliance.

Hewston v Oftsed – what constitutes gross misconduct?

Mr Hewston was an Ofsted school inspector. In 2019 he attended an inspection at a school, during which a pupil had come inside from heavy rain. Mr Hewston brushed the water of the head and forearm of the pupil (a 12-year-old boy) and put his hand on his shoulder. The incident was reported to Ofsted who undertook an investigation following a letter from the school which alleged that Mr Hewston had put the child at risk. Mr Hewston was later dismissed for gross misconduct after his employer, Ofsted, alleged his actions had brought it into disrepute.

During a disciplinary investigation, Mr Hewson allegedly showed no remorse and Ofsted therefore became concerned he might repeat the action, despite them finding he was no risk. An Employment Tribunal initially found that the dismissal was a fair one and the outcome (dismissal) was within the range of responses open to a reasonable employer.

Mr Hewston appealed to the EAT however and, on 14 March 2025, it substituted a finding of unfair dismissal.

The incident raised no safeguarding issues, the employer did not have a ‘no touching’ policy and they failed to provide adequate training. They also found the dismissal was procedurally unfair as Mr Hewston was not provided with the report produced by the local authority, the original complaint letter or the pupil’s statement.

How could it impact your business?

This case demonstrates the problems that employers could face when dismissing employees who work with children (or vulnerable adults) without having very clear training and policies in place.

Some behaviour by employees will obviously be unacceptable regardless of the precise nature of employer policies. Many others, however, like the situation involving Mr Hewston, can be more subjective and therefore dismissal might represent an unfair and heavy-handed reaction. Employers should operate clear policies and training on the specific standards and safeguarding steps expected in the workplace. In situations such as these, a clear and well evidenced investigation should be undertaken.

The relevant tribunal (EAT) also emphasised that, where an employer alleges loss of confidence in the employee, such a loss of confidence will not justify dismissal unless it can be evidenced that the conduct of the employee was sufficiently serious to warrant that view.

What steps should you take?

Safeguarding standards in regulated areas, or those involving vulnerable adults and children are essential. Employers should have a clear policy on the behavioural standards expected, setting out what is and isn’t considered acceptable behaviour. You should consider whether other options can be taken before dismissal, such as additional training or written warnings.

Should you consider it necessary to dismiss an individual for gross misconduct, this case has confirmed that it is “obviously good practice” to allow the employee to have sight of any contemporary record of the complaint unless there is good reason not to do so. A failure to do this may make the dismissal procedurally unfair if it prevents the employee from responding to the allegations in detail.

Morais v Ryanair DAC [2025] - Protection against retaliation for striking workers

The Blacklist Regulations are a rarely featured but important change to the law dating from 2010. In essence, the Regulations try to stop employers from creating a ‘blacklist’ of employees that join unions, or participate in their activities, and then using that list to target or victimise them.

The employees in the case of Morais v Ryanair DAC [2025] were airline pilots who were members of an independent union, BALPA. The pilots concerned sought to take part in a strike organised by BALPA. Afterwards their concessionary travel benefits were withdrawn by Ryanair for a period of 12 months.

The claimants alleged this amounted to a detriment based on Union membership under s.146 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). The unusual feature of the case was that they also alleged that, to withdraw the benefits in question, Ryanair had first produced (for its own use) a list of pilots, identifying the individuals who had taken strike action. The employment tribunal agreed, and found Ryanair was liable for creating such a ‘prohibited list’.

The matter ultimately went to the Court of Appeal and was heard earlier this year. Ryanair argued that employers were not restricted, as such, from producing a list of striking pilots. However, the Court of Appeal disagreed, upholding the decision that the Blacklist Regulations had been breached. The ‘activities of trade unions’ that are protected are wide and includes industrial action. This was confirmed by reference to Government consultation and guidance which stated that official industrial action qualified for protection, whether the organisation of such action complies entirely with the requirements set out in trade union legislation.

How could it impact your business?

This judgment makes it clear that union members in official industrial action will be protected from being blacklisted and targeted by their employer.

Employers should note that under the Blacklists Regulations there is a specified minimum compensation level of £5,000 for engaging in blacklisting.

You may, however, wish to note there are plans to increase the scope and protection of blacklisting protections for union activities and members under the forthcoming Employment Rights Bill, due in 2026.

What steps should you take?

Employers should take care when handling and responding to workers taking industrial action, even after the threatened action is concluded. In particular, targeting those who do so (for example by a reduction in benefits post-strike) could be a costly mistake under the Blacklist Regulations.

Employment Rights Bill Round-up

There have been a number of suggested amendments to the Employment Rights Bill (ERB) which is making its way through Parliament, and this is a watching brief of the key changes. At this stage, much information is being left to secondary legislation and so this is by no means the final position.

Further details on the original ERB proposals can be found in our October 2024 Horizon Scanning article.

Collective Consultation

The Bill will be amended so that the maximum protective award (payable to employees where an employer has failed to collectively consult) will double from 90 to 180 days’ pay. The Government will continue to seek views on strengthening the framework and enhance the Code of Practice on Dismissal and Re-engagement.

Trade Unions

A number of amended provisions have been put forward including:

• strengthening protections against unfair practices during statutory recognition process;

• removing the 10-year requirement for unions to ballot their members on maintenance of a political fund;

• simplifying the industrial balloting process for industrial action and (further down the line) consulting on the introduction of e-balloting;

• extending a union’s mandate for industrial action from 6 to 12 months; and

• allowing unions digital access to the workplace for collective bargaining (this is in addition to physical access already provided for).

Statutory Sick Pay (SSP)

Following a recent consultation, it is proposed that all employees will now be entitled to SSP from day 1 of their sickness absence. The Bill, as presently drafted, will remove the lower earnings limit (currently £123 p/w). The Government has confirmed that employees will receive 80% of their weekly earnings or the statutory amount (£116.75 p/w), whichever is lower.

What steps should you take?

If the changes above are relevant to your business, our Employment team would be happy to speak to you. We will also be covering the ERB more extensively in the coming months, so look out for our further updates on this topic.

All change in EU ESG: The EU Omnibus Package

On 26 February 2025, the EU Commission published the first two Omnibus packages, simplifying EU rules on sustainability reporting and due diligence obligations. This coincides with the publication of the European Clean Industrial Deal (CID) which priorities decarbonising energy intensive industries and promoting investment in cleantech to position the EU as a competitive, global leader in the market, part of a larger strategic policy steer in Europe towards promoting European competitiveness.

The Omnibus I Package includes proposals to amend the Corporate Sustainability Reporting Directive ("CSRD"), Corporate Sustainability Due Diligence Directive ("CS3D") and Carbon Border Adjustment Mechanism ("CBAM") to streamline and simplify the regulatory framework on businesses trading in the EU.

How could it impact your business?

The Omnibus I Package recognises that simplicity and sustainability are key to enable businesses to remain competitive whilst meeting sustainability goals. The Omnibus I Package is at this stage still a proposal, not a change in law – businesses already subject to CSRD, CS3D and the CBAM will need to continue to comply with these obligations whilst the proposal goes through the EU’s legislative process. Details of how the omnibus package may change obligations under each of the pieces of legislation in the scope of the package is set out in greater detail below:

CSRD

The Omnibus I Package proposes a two-year postponement to sustainability reporting requirements under the CSRD for all companies that are required to comply from FY 2025 or 2026 depending on their size. Good news for those companies struggling to get to grips with how reporting under the CSRD might look.

Moreover, the proposed changes to the thresholds are expected to reduce in-scope companies by circa 80%, a revision which will vastly reduce reporting requirements on SMEs and businesses with a small footprint in Europe. For those still caught in the scope of reporting requirements, the Omnibus I package reduces the data points which must be included in reporting.

CS3D

The Omnibus I Package proposes a one-year delay for introduction of the CS3D. Under the Omnibus I Package, organisations in-scope of the CS3D will only have to look beyond their first tier business relationships if they have reason to believe that adverse impacts have arisen or may arise and will not have to terminate business relationships as a last resort – instead, they can suspend the relationship whilst being required to work with the supplier towards a solution.

The double materiality principle embedded in the CS3D stays, for now – companies would continue to report on both internal risks and opportunities related to sustainability, as well as the external impact of their operations on the environment and society.

CBAM

The proposal to amend CBAM introduces a tonnage threshold removing 90% of participants from its scope – benefitting smaller importers. Simplified reporting requirements and calculations aim to reduce the burden on in-scope businesses.

What steps should you take?

The current CSRD, CS3D, CBAM and Taxonomy framework will continue to apply unless and until the Omnibus I Package is adopted, so businesses should understand how the rules apply to them and develop best practices. Please also note that these measures apply to businesses trading in the EU even if they are headquartered elsewhere.

This is the first of a number of changes expected in the EU following the Draghi Report which aim to promote the EU as a place to do business. Businesses should continue to keep an eye on the evolving regulatory framework in the EU to ensure they are aware of key upcoming changes.

Statement of Changes to Immigration Rules

The first changes of 2025 to the Immigration Rules have been announced.

On 12 March 2025 the Home Office published a 135-page statement of changes which are due to take effect over a period from 12 March 2025 through to 13 August 2025. Although this is a big update to the Immigration Rules there are only a few changes that employers need to be aware of. This includes changes to how sponsored care workers and senior care workers can be recruited under the Skilled Worker route and the minimum salary requirements Skilled Workers can be paid. Both of these changes take effect from 9 April 2025.

How could it impact your business?

Following the changes, employers in England looking to recruit sponsored carers will first need to look to recruit from a pool of workers who are already in the UK. This pool will consist of carer workers and senior care workers who were previously sponsored under the Skilled Worker route but no longer have a sponsor. Only after attempts have been made to recruit from this pool will sponsors be able to sponsor from other immigration routes or from overseas to fill care roles. When sponsoring outside this pool, sponsors will be expected to confirm they have tried to recruit from this pool and that no suitable workers were available.

Regarding the change to Skilled Worker salary levels, generally a Skilled Worker must be paid a minimum salary of £38,700. However, depending on the role or the Skilled Worker, this minimum salary may be higher or lower. Following these changes, the minimum amount it is possible to pay a Skilled Worker is increasing from £23,200 per year (or £11.90 per hour) to £25,000 per year (or £12.82 per hour). This change will only impact a small number of low paid roles and is being made to ensure the floor salary level remains significantly above the National Living Wage, which is due to increase this April.

Changes are also being made to salary rates (known as going rates) for occupations in healthcare and education.

What steps should you take?

For the recruitment of care workers, this change to recruitment practices will need to be added to any existing recruitment policies for relevant employers to ensure that the correct process and sponsorship duties are being followed and visa applications are not being refused. However, it will not apply to existing workers who were already sponsored as carers or senior carers before the changes take effect, or those switching from other immigration routes who have been working lawfully for their sponsor for at least three months

No immediate action is required in relation to the salary threshold increases and it shouldn’t affect existing workers. However, the changes will need to be taken into consideration when recruiting new workers or extending visas for existing employees. This may also result in a change to any existing or planned budgets.

The full statement of changes and the accompanying explanatory memorandum can be found here.

Planning and Infrastructure Bill

The Planning and Infrastructure Bill has been introduced to Parliament and is arguably one of the key pieces of the Government’s planning reform measures. Indeed, the first and second readings have already taken place, showing eagerness to progress it.

The Bill itself can be found on UK Parliament’s website, along with explanatory notes to accompany it. A helpful, comprehensive overview can also be found on the website here.

Predominantly, the Bill will relate to England, with some measures applying to Wales and extending to Scotland. Further Regulations will be required to bring certain measures forward.

How could it impact your business?

Following a recent series of working papers, we had a broad idea of what to expect. The emphasis is clearly on speeding up planning decisions to facilitate a boost in housebuilding and delivery of vital infrastructure developments. In return, consistency and certainty should be the result.

The Bill is seeking to:

• Improve certainty and decision making in the planning system by modernising the operation of planning committees to operate as efficiently as possible, maximising the use of professional planners and, in turn, reforming planning fees so that local authorities have efficient resource.

• Restore a system of strategic planning in England, requiring spatial development strategies to become the development plan for local authority areas.

• Introduce a strategic approach to nature recovery, including a new nature restoration fund to unlock development and environmental delivery plans.

• Deliver a faster and more certain consenting process for critical infrastructure to upgrade the country’s major economic structure (including electricity and clean energy sources).

• Expand, update, and allow more flexible use of development corporations

• Reform compulsory purchase, including removal of hope value.

What steps should you take?

Given the potential impact, it would be prudent to keep an eye on progression of the Bill and any further publications from the Government.

The Bill still needs to pass through Parliament and further regulations are required in some instances before there are any major changes. However, it would be good preparation to understand said changes now so that any resulting impact to business operations and development can be considered well in advance.

Fraudulent misrepresentation in replies to pre-contract enquiries

In Patarkatsishvili & another v Woodward-Fisher [2025] the High Court concluded that a seller’s failure to disclose the presence of a moth infestation in the insulation of a property, which amounted to a fraudulent misrepresentation. The Court ordered that the sale contract be cancelled and the parties put back in the position they would have been had the contract not been made.

Despite the seller having carried out pest control measures and obtaining reports on the moth infestation, in the pre-contract enquiries, the seller stated that he was unaware of any matters affecting the property relating to ‘vermin infestation’, that there were no reports related to a vermin infestation or anything else concerning the fabric of the property, and that he was unaware of any defects in the property not apparent on inspection.

The court found that the seller had no honest belief in the statements made, knowingly made false statements in the pre-contract replies and was reckless about the truth of his responses. This was enough to establish the more serious fraudulent misrepresentation.

How could it impact your business?

Although this case concerned a residential sale and purchase, it is highly relevant to both commercial and residential sales and lettings, and anyone dealing with replies to enquiries or any form of pre-contract disclosure.

The court was not persuaded to give the terms “vermin” and “defects” in the pre-contract enquiries a narrow interpretation. It was noted that in various dictionaries vermin included insects and that the dictionary definitions were no more than a starting point. Context was everything and, in this case, the term “vermin” covered moths.

Further, the enquiry as to whether there were any defects in the property was not limited to structural defects. The moth infestation was located in the wall insulation of the property. The court found that insulation in walls and voids was part of the structure and was clearly a part not apparent on inspection.
These points should encourage sellers and landlords to give a wide interpretation of pre-contract enquiries to ensure they do not misrepresent the position.

It is also important to consider what written reports or opinions are obtained by sellers and landlords before sale or letting their property. In this case, the reports obtained by the seller on the moth infestation, whilst not surveys or formal condition reports, were held by the Court to be disclosable.

It did not matter that the buyers had not themselves read the replies, it was sufficient that their legal representatives had done so and were satisfied there was nothing adverse in them. The buyers had therefore relied on the misrepresentation and proceeded with a purchase they would not otherwise have done had they been aware of the infestation.

This was an expensive lesson for the seller, as the seller did not have sufficient funds to simply pay the buyers for return of the property. Accordingly, the court held that the buyer would return the title to the property to the seller but subject to a lien or equitable charge in favour of the buyer. This would allow the seller to deal with the moth infestation before selling the property in order to realise sufficient funds to repay the liability to the buyer.

The buyer was also successful in obtaining damages for consequential losses such as stamp duty land tax, repair costs and legal costs.

What steps should you take?

1. Sellers and landlords should give clear, diligent, honest replies to enquiries made.

2. Enquiries should be widely interpreted.

3. Careful thought should be given as to obtaining reports pre-contract as these potentially can be disclosable.

4. It is not enough to fall back on the wording that the buyer or tenant must rely on its own enquiries when knowledge is held by the seller or landlord.

Even though putting the parties back in the position they were in before the contract was made was not straightforward, this did not prevent the Court from ordering the same. Practical justice was the key and a workable solution was found.

Office of Financial Sanctions Implementations (OFSI) Annual Review 2023/2024

OFSI has published its Annual Review for 23/24 (the "review") in which it has confirmed its continued commitment to the three pronged approach to its activities: Engage, Enhance and Enforce. The review has also highlighting that, as at December 2024, over 2001 individuals and entities had been designated under the Russia Regime since February 2022 resulting in frozen assets in excess of £25.03 billion.

A summary of OFSI’s approach

Engage

OFSI is committed to engaging with industries within the UK to enhance understanding of UK sanctions and address specific challenges. During the financial year, OFSI conducted over 350 domestic and international engagements and released 161 notifications on the e-alert service.

Enhance

During the financial year, an additional 564 designated persons were added to the consolidated list by OFSI, leading to a total of 4,331 entries across 35 regimes. There has been an increased focus on proportionality and efficiency, resulting in decisions on 1,401 licencing cases, up from 503 in the previous financial year.

Enforce

Perhaps most crucially for businesses, OFSI is committed to proactively enforcing financial sanctions with a view to promoting better practices and behavioural change.

• OFSI progressed a substantial number of investigations, proudly noting that it had opened a record number of investigations (369).

• It confirmed that it will continue the practice of naming and shaming offenders as a deterrent.

• In August 2024, OFSI issued its first civil monetary penalty (CP) relating to breaches of the measures introduced in response to Russia's invasion of Ukraine in 2022 to Integral Concierge Services Limited.

• More monetary penalties have followed, most recently, the Russian branch of UK law firm. Herbert Smith Freehills (HSF Moscow) received a fine of £465,000 in relation to payments made to designated persons prior to its closure in May 2022. (It should be noted that no criticism was made of HSF overall).

What steps should you take?

The Review serves as a further reminder to all clients to regularly review their sanctions policies (and training) in an ever-changing landscape and, in particular, to ensure that sufficient checks are in place so that payments are not inadvertently made to individuals or entities on the constantly updating sanctions lists.