Welcome once again to The Finance Brief. In this edition we have a special focus on guarantees, and in particular we look at best practices for lenders to follow in light of both the Lending Code and the recent case law in this area, in order to ensure that lenders have an effective guarantee from an individual. We also consider the likely consequences of the government's consultation on changes to the income tax rules on interest, we provide a guide to Regulated Mortgage Contracts and, finally, we highlight the potential legal issues around financing "shadow yachts".
The contributors to this edition are listed below (with their contact details). Each of them would be more than happy to respond to any further queries you may have arising out of these articles on their topics of expertise.
Hannah Salton, Editor
The Lending Code and Guarantees
We are sometimes asked what effect the Lending Code has on a lender's ability to take a guarantee or third party security (that is, security given for the obligations of a third party). Here we look at the key implications of the Code on lenders.
Individual Guarantees: the requirement for independent legal advice
Whether a bank is a subscriber to the Lending Code or not, the recent cases of Trustees of Beardsley Theobalds Retirement Benefit Scheme v Yardley (2011) and Heather Padden v Bevan Ashford (2011) have once again highlighted the need for a bank taking a guarantee from an individual to take care to mitigate the risk of such guarantees being unenforceable by ensuring that sufficient independent legal advice is taken by the individual at the time of entering into the guarantee.
In this article we provide a guide to Regulated Mortgage Contracts. We consider first of all what qualifies as a Regulated Mortgage Contract and then look in detail at the statutory regulation of such mortgages, the requirements surrounding authorised persons and authorised firms, and the limited exemptions which a lender may be able to make use of.
HMRC consults on significant extensions to withholding tax on interest
HMRC has, following the recent budget, issued a consultation on changes to the income tax rules on interest. The closing date for comments on the consultation is 22 June 2012 and some time after that HMRC will publish a response document. If any of the changes mentioned in the consultation are to be implemented, which seems likely, draft legislation is expected to be announced in autumn 2012 for inclusion in Finance Bill 2013 (around March 2013). The key changes are summarised here.
A Guide to Financing "Shadow Yachts"
We are currently acting on the financings of several superyachts and one question which arose recently was in relation to "shadow yachts" and the potential legal issues surrounding the financing of them. We thought this would be a useful opportunity to look in more detail at the points which a lender may have to consider when faced with the financing of shadow yachts.
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