December 2020 - Vymans

21st December 2020

Evicting Tenants following New Tier 4 Restrictions

From 29 August 2020, all section 21 notices must give a minimum of 6 months’ notice to the Tenant. In addition, the majority of section 8 notices must also give a minimum of 6 months’ notice save for certain breaches of the tenancy agreement such as the tenant being in 6 or more months rental arrears (4 weeks’ notice only) or for antisocial behaviour. From 29 August 2020, all section 21 notices must give a minimum of 6 months’ notice to the Tenant. In addition, the majority of section 8 notices must also give a minimum of 6 months’ notice save for certain breaches of the tenancy agreement such as the tenant being in 6 or more months rental arrears (4 weeks’ notice only) or for antisocial behaviour. It is an extremely difficult time for both Landlords and Tenants during these unprecedented times. Following the government’s latest restrictions on 20 December 2020, entering more than 38 million people into tier 4, the following still applies to both Landlords and Tenants:

1. All section 21 evictions are suspended until 21 January 2021, subject to any further changes by the government.

2. There are a few exceptions to the above, namely antisocial behaviour and if the tenant is in more than 9 months’ rent arrears.

3. It should be noted that Bailiffs must give the tenant at least 2 weeks’ notice of an eviction date.

Further to the above, all Courts remain open and are hearing possession matters. However, there is a large backlog of cases resulting in serious delays in obtaining a hearing date and possession orders.

Current Notice Period for eviction notices

Checklist for serving Section 21 Notice

In order for a section 21 notice to be valid, the following will need to be served on the Tenant beforehand in compliance with the Deregulation Act 2015:

1. Protection of the Deposit in a Scheme. The Deposit must be protected within 30 days of entering into the agreement. If the Deposit has not been protected, then a section 21 notice shall only be valid once the deposit has been returned in full to the tenant.

2. The Landlord must also legally provide the tenant with a specific set of information relating to the tenancy, “Prescribed Information”. This information must be served on the tenants within 30 days.

3. Must serve a gas certificate and energy performance certificate on the tenant, if applicable. Please note, this may not apply for tenancy agreements prior to 1 October 2015.

4. Must serve a copy of the “How to Rent: the checklist for renting in England”.

Section 21 Notices will only be valid for six months from the date of issue. This means you have to issue possession proceedings within six months of when it is served. After six months it becomes invalid; and a new Section 21 Notice will need then to be served.

The above obligations and act can found on:

https://www.legislation.gov.uk/ukpga/2015/20/contents/enacted.

If you require any assistance, whether you are a landlord or tenant, please do not hesitate to contact our litigation department on 020 8427 9080.

14th December 2020

Commercial Rent Arrears Moratorium Extended Again…

On 9 December 2020 the UK Government announced a further extension to the moratorium on forfeiture of leases on the grounds of non-payment of rent or other sums due, and the presentation of winding-up petitions.

The extension is until 31 March 2021

Whilst the Government has said this is a “final extension”, given this Government’s tendency to perform U-turns I wouldn’t count on it.

As most of you are probably aware, there are already restrictions on Commercial Rent Arrears Recovery until the same date, which limits the recovery action that can be taken.

So can commercial landlords do anything to recover outstanding rent?

There are genuine cases of many commercial tenants having effectively lost any income stream at all as a result of the global pandemic, and commercial landlords should exercise caution before taking any legal action in respect of those tenants.

There are, however, also many commercial tenants who are taking advantage of the Covid imposed limitations – the ‘can pay but choose not to pay’ tenants.

There is no embargo on debt proceedings being issued against a defaulting tenant and a money judgment being obtained for the rent arrears. The realisation that a CCJ entered against a tenant, which may potentially impact upon their credit rating, may bring about a reality check that there is only so long that they can avoid paying the outstanding rent and/or refuse to engage with the landlord. I see no reason why, in such cases, a commercial landlord should not take such action – at the very least it may bring the tenant to the table to enter into a dialogue with the landlord.

Landlords should also bear in mind their right to recover rent from former tenants and their guarantors by serving s.17 notices – remember that these must be served within 6 months of the arrears falling due.

The Government also announced that it would be carrying out “a review of the outdated commercial landlord and tenant legislation, to address concerns that the current framework does not reflect the current economic conditions”. On that one, watch this space.

If you are a commercial landlord and would like to discuss anything within this article, please contact Marcella Cox on 020 8427 9080 or by email on marcella.cox@vyman.co.uk.

14th December 2020

Furlough Fraud – The Countdown Begins?

The Coronavirus Job Retention Scheme (CJRS) was introduced with the aim of safeguarding UK jobs during Covid-19 and has almost certainly gone a long way to do so. Under the CJRS, businesses have been able to furlough staff rather than make them redundant, with the furloughed staff receiving up to 80% of their wages from the Government in the form of a grant paid to the employer, with an upper limit of £2,500 per month. The CJRS is due to end on 31 March 2021.

A number of factors have left the CJRS open to abuse, including the speed with which it was introduced and the intricacies of the CJRS rules. HMRC has acknowledged the inevitability that some employers may have inadvertently breached the rules.

Might this impact you as an employer?

The Finance Act 2020 gives HMRC substantial enforcement powers in relation to the CJRS. In particular, Section 106 and Schedule 16 to the Act, entitles HMRC to claw back CJRS payments made to businesses which were not entitled to receive them, or where it can be shown that the payments were not used to pay employment costs.

What if the business is insolvent?

Where a business has become insolvent or insolvency is considered likely, HMRC can make Directors jointly and severally with each other and the company for the company’s liability where there has been a deliberate decision to claim or retain CJRS grants, to which the company was not entitled.

What are the sanctions?

A financial penalty can be given if the company fails to tell HMRC it was not entitled to the CJRS grant and the Directors knew this. The penalty may be as high as 100% of the lost revenue if it can be shown there was a deliberate concealment.

If enforcement action is taken, the penalty will not be less than 30% if the money is repaid at an early stage; criminal charges are also an option for HMRC.

If employers notify HMRC that they have received a payment to which they are not entitled before enforcement action is taken, that may result in no sanctions being imposed but there are strict time limits within which the notification must be made.

If the company can’t or won’t pay, HMRC won’t be shy in taking action against the Directors personally.

What should you do?

If you have received a CJRS grant, we would encourage you to carry out a full review of your records to ensure that you have not fallen foul of the rules and potentially become liable to enforcement action.

It goes without saying that the Government will be keen to recover any payments it can show the company was not entitled to, and I suspect that, when the CJRS ends in March 2021, proactive steps will be taken to do so, with dedicated resources being made available given how much is potentially up for recovery.

If you would like to discuss anything within this article, please contact Marcella Cox on 020 8515 1968 or by email on marcella.cox@vyman.co.uk.