Media & technology

What’s in Store for Retail?
11 September, 2018

 

deymos © 123RF.com

After almost a decade of decline, the future of the British high street is now a hot topic for debate. The 2008 recession combined with the public’s ever growing obsession with internet shopping and the need for something new and exciting has caused local high streets to fall rapidly behind the times. So, what next? In an age where the life cycle of brands has shortened and the focus of the consumer is more on convenience, we are seeing a change in attitudes towards technology from the high street retailer.

Here’s a quick peek in to what we can expect to see on our high streets in the future:

The Touch Screen

Shops and restaurants are now quickly adopting the touch screen along with self-service systems to remove the queueing process. Customer frustration at the checkout has driven retailers to implement a smoother and quicker retail experience. Even restaurants are now using tablets to speed up ordering and some have even gone so far as to have tablets as tables so that diners can browse a virtual copy of the menu and send their order straight to the kitchen.

The Smart Shelf

Along side the touch screen is the smart shelf; a very advanced way of digital shopping using artificial intelligence and visual cognition technology to choose your product from a computer-generated shelf. This is starting to appear in the US and will no doubt hit the UK in the not so distant future.

On the go

The smart phone has fundamentally changed the way we shop. Not only are you able to browse for products; smart phones have become forms of ID as well as hubs of information and they have revolutionised the way we pay for things. Apps such as the one adopted by Starbucks where you can order your coffee to be ready and waiting at your chosen store are attractive to the busy consumer. Time is now a luxury and it is only a matter of time before more and more retailers adopt this type of ‘click and collect’.

Enhanced interaction

Enhanced interaction has been at the forefront of how retailers interact with consumers. Just recently, the global make up brand, Sephora, patented technology that allows customers to ‘try on’ different shades of lipstick through an app. Apps such as these will allow retailers to focus more on value added services and the overall shopping experience.

3-D printing

Consumers want the flexibility to buy what they want, when they want and it is no longer cost effective for the retailer to stock every item or size in their store. The choice of goods has widened and retailers need to keep up with the extensive range of merchandise on offer. 3-D printing will eventually see shops becoming more like showrooms and shopping centres will have printing outlets to offer the ever expanding range of products.

After hours

Retailers are now reimagining old ideas and using technology to make better use of the shop frontage. Window displays are becoming more interactive and even personalised to whoever is standing in front of it. Perhaps a little way off, but the shop window will soon be ‘brought back to life’ and will eventually move away from the old fashioned static display.

Beware! The high street is making a comeback and it’s going to be more exciting than ever.

 

For more information on commercial real estate please contact Roberta Organ at roberta.organ@cripps.co.uk or +44 (0)1892 506 286

For updates from us and the latest Tech news follow us on Twitter @CrippsTechLaw


Share and Share Alike – Do’s and Don’ts in ensuring your Founder Shares and Incentive Shares are Tax Efficient
22 August, 2018

Young media and tech businesses are all about growth and with the Government providing an incentive with a 10% capital gains tax rate for entrepreneurs, the objective is often an exit via a sale of the business.

It is often overlooked that what the Government has given via a beneficial CGT regime it has taken away through a complex income tax regime for ‘employment-related securities’. The regime taxes value passed to employees via shareholdings in the employing company and applies to employees and directors (with limited exceptions for shares acquired from family and personal relationships). 

Typically founder and incentive shares fall into both regimes and unexpected tax charges can arise.

Here are some do’s and don’ts to avoid an income tax charges arising on shares in your company:

  • Don’t forget that founder shares are not exempt and must be reported to HMRC. Consideration must be given to whether founder shares are ‘restricted securities’ within the regime and whether any permitted tax elections should be made to avoid unexpected tax charges on a future sale (Tip – they often are, elections usually should be made – and there is only a 14 day window to make them!)
  • Don’t delay in issuing shares to fellow directors or founders on starting a new business – it is easy to forget, but once values start to rise any new share issues may be subject to employment taxes irrespective of if you are simply implementing the intended structure.
  • Don’t rely on a gentlemen’s handshake in respect of grants or gifts of shares to key individuals, or on ‘behind-the-scenes’ reallocations of sale consideration. Employment taxes are likely to arise in both situations. If shares are too valuable to issue without an upfront income tax charge, consider ‘growth shares’ which have low initial value but which could produce a significant return on a sale.
  • Don’t assume that a reorganisation of the company (e.g. putting in a new holding company) won’t give rise to employment tax charges. The rollover provisions for employee shares are not as generous as for CGT and need careful consideration in every case.
  • Do consider implementing a tax-effective share incentive scheme such as Enterprise Management Incentive (EMI) Options. EMI Option shares qualify for entrepreneurs’ relief, can contain performance criteria and can be made conditional on the individual remaining in employment until a sale of the business. There is little to lose and a lot to be gained by using EMI Options.
  • Do consider rewarding contractors with options. Typically a contractor will only incur income tax on the value of the option received which is likely to be low. When the option is exercised and the shares sold the contractor should only pay CGT.  
  • Do make sure your tax reporting of employee shares is kept up to date. Penalties can be imposed for late or incomplete reporting and it can be a headache to sort out on a sale of the company.
  • Do take tax advice when dealing with employee shares. Advice at the outset of a new business and on subsequent shares issues can prevent ‘dry’ tax charges and ensure a CGT outcome.

 

For advice on tax on employee shares and on share schemes please contact Elizabeth Middleton on +44 (0)1892 506 080 or at elizabeth.middleton@cripps.co.uk

For updates from us and the latest Tech news follow us on Twitter @CrippsTechLaw


Will your digital assets die with you?
8 August, 2018
by: Cripps

The term ‘digital asset’ is used to describe a relatively new type of property and broadly includes all content or accounts online, or stored on devices such as computers or smartphones, that someone may own or have a right to use. With the rise in use of digital platforms such as social media, online banking and online gaming accounts, the ownership of digital assets is on the rise but unfortunately English law has not yet caught up with modern times. This means there is often confusion as to what happens to such assets on death.

Exactly how digital assets are treated on death largely depends on the type of asset. For example, online bank accounts are usually fairly easy for executors to trace and on death are dealt with in the same way as a traditional bank account. However, other assets such as photos on social media, virtual currencies, music on iTunes or ebooks on Amazon Kindle may cause more of a problem.

For example, often in the case of subscription accounts such as iTunes, the digital assets are not owned by the individual but rather the individual has bought a non-transferable license from the Internet Service Provider (ISA). This means that the music purchased by the individual cannot be bequeathed under a Will or transferred on death because the ISA considers that the individual only ever had a license to access the asset. Virtual currencies such as bitcoin are stored online in a virtual wallet but a “private key” is needed to access the content of the wallet. If a bitcoin owner therefore dies without passing on the private key to his executors, his executors and beneficiaries may well discover that they will never be able to gain access to what may be substantial wealth inside the virtual wallet. 

What can you do?

Regularly review and keep a record of all your digital assets to store with your Will. This will help your executors to identify such assets on death. It is not advisable to create a list of passwords to store with your Will, although there are a number of service providers who for a fee will store such information for you in a virtual safe. This type of service is of course not without its risks.

Review whether you can nominate someone to download some or all of the data on your death on any of the websites you use. For example Google Inactive Account Manager and Facebook Legacy Contact allow you to nominate such people.

Print off or store copies of key documents on your computer as opposed to storing them online. Similarly, remember that photos or videos may have sentimental value so downloading these or printing them off to store in an album will mean that your family and friends are able to access them more easily.

 

For more information on how you can best protect your digital assets on death, please contact Anna Ridley on 01892 506 151 or at anna.ridley@cripps.co.uk.


Carphone Warehouse Data Breach Part 2 – Just When You Thought It Was Safe To Go Back In The Water
3 August, 2018

It has been revealed that last year’s cyber attack on Carphone Warehouse affected a massive 10 million customers, up from the original estimate of 1.2 million.

The data breach, which prompted a record equalling fine from the Information Commissioner’s Office (ICO) of £400,000, revealed vast quantities of customers’ personal data including, names, addresses, email addresses and card details.

Breach Management

The recent revelation is a reminder of the importance of cyber security and the need for effective policies and procedures to be in place. It also emphasises how the severity of a data breach can be difficult to quantify and exposes the challenges in effectively managing a security breach.

These latest revelations highlight how damaging a breach can be to a business’ reputation in the long term. Due to the time it has taken to identify the extent of the security failure, even more customers will be uncertain as to the safety of their personal data and may lose trust in the company. Carphone Warehouse’s share price has never recovered from the data breach.

One of the lessons to be learnt from this case – aside from the importance of data security – is how to effectively manage a data breach in order to limit damage to reputation. Carphone Warehouse failed to report breaches accurately and swiftly as well as failing to provide guidance to affected individuals.

The Bright Side

The silver lining for Carphone Warehouse is that the initial breach took place prior to the implementation of GDPR, limiting the maximum fine possible to £500,000. For those businesses that face a data breach in the future, the financial and reputational damage could be far more severe.

For more information on data protection, please contact Elliot Fry at elliot.fry@cripps.co.uk or on +44 (0)1732 224 034

For updates from us and the latest Tech news follow us on Twitter @CrippsTechLaw


Cyber Security: The Network And Information Systems Regulations
1 August, 2018

Whilst overshadowed by GDPR, important cyber security regulations called The Network and Information System Regulations 2018 (NIS) came into force in May this year.

What is NIS?

NIS’s aim is to establish a common level of security for network and information systems, with the main focus being on cyber security.

Who does NIS apply to?

NIS applies to operators of ‘essential services’ (OES) and certain digital services providers (RDSP)

OES’s operate essential services to the economy and wider society (e.g. water, transport, energy, healthcare and digital infrastructure). NIS applies threshold criteria so not all organisations listed above will automatically be covered.

What is an RDSP?

RSPS’s provide specific types of digital services (e.g. online marketplaces, online search engines or cloud computing services).

Again RDSPs are subject to threshold criteria – being that an organisation has its head office in the UK (or has ‘nominated a representative’ here) and has 50+ staff and a turnover of €10m or more.

What does NIS require?

NIS’s key requirements can be broadly summarised as

  • taking appropriate and proportionate measures to ensure the security of network and information systems;
  • notifying regulators of incidents.
  • Beyond the above NIS contains more specific obligations for OES’s and RDSP’s to comply with.

What are the reporting obligations?

Organisations must inform their regulator of NIS incidents ‘without undue delay’ and no later than 72 hours after an organisation is aware of an incident (closely matching the GDPR’s obligation to notify the ICO of certain data breaches).

Who are the regulators?

NIS does not stipulate a central regulator. Each sector has its own regulator. For example, Ofcom is the regulator in relation to digital infrastructure.

What are the sanctions?

NIS allows regulators to ask organisations for information and conduct inspections.

Where NIS failures occur regulators can also issue enforcement notices with steps an organisation needs to take.

NIS contains some eye-watering fines. The maximum fine under NIS is £17m for a ‘material contravention which has caused, or could cause, an incident resulting in an immediate threat to life or significant adverse impact on the United Kingdom economy’.

More information

Unlike GDPR, NIS only applies to certain organisations. However, the consequences of non-compliance have very strong teeth.

Organisations which could potentially be OES’s or RDSP’s should therefore consider whether NIS applies to them. Whilst the ICO is not an overall regulator, the ICO’s guide at https://ico.org.uk/for-organisations/the-guide-to-nis/ is a useful introduction.

For more information on NIS, please contact Tom Trowhill at tom.trowhill@cripps.co.uk or on +44 (0)1892 506 342

For updates from us and the latest Tech news follow us on Twitter @CrippsTechLaw


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