The Law Society Gazette recently reported on a case where a pupil barrister had mistakenly cited fake cases as part of her legal submissions in a case involving a local authority’s duties towards a homeless man. She had found the cases through her internet research and did not realise that the cases which she had cited did not actually exist. They had been entirely made up by an artificial intelligence program even though they appeared to her to be genuine. The result was a wasted costs order not only against her but also against the Law Centre which had instructed her. Add to that the reputational damage against both as well as the possibility of professional sanction. That’s not to say that artificial intelligence should never be used as a research tool. Only that it is a professional responsibility to carry out the follow-up due diligence to ensure that what is cited is absolutely correct.
It’s important to recognise what exactly AI is. As far as I can see, AI, in this situation, is nothing more than an advanced search engine which not only identifies data but then goes on to mash it up and serve up something else out of its components. It’s like me going down to my local breakers yard and collecting bits and pieces to build my own car. I’m sure that if I asked AI to write my next Eurovision hit in the style of Elton John, it would present to me a rehash of Lulu’s ‘Boom Bang Bang’. Which brings me onto another controversial issue. Because if I then go on to use that content as part of my Eurovision entry, I will then be breaching copyright. But that doesn’t mean that I don’t use AI in my work, including the writing of this article.
As I was aware that this was not the first instance of fake cases being cited by AI, I asked my Gemini search engine to find me some other instances where lawyers have been caught out using fake cases generated by AI. It came up with the following cases: New York Aviation Injury Claim (Mata v Avianca 2023); Morgan v Morgan (Wyoming); UK Tax Tribunal Case (Harber v Commissioner for HM Revenue and Customs) which involved a self-represented tax payer.
Have I checked any of those cases out before including reference to them in this article? No I haven’t. But neither am I intending to cite them in any court proceedings anytime soon. So I’m afraid that you will just have to trust me.
One of the reasons given by the pupil barrister for her use of AI generated cases was that she did not have direct access to Lexus Nexus or the White Book, which contains the civil practice rules. In those circumstances my own ‘go to’ would be the British and Irish Legal Information Institute, which provides a free on-line legal resource for current case law. It also makes it incumbent for anyone acting for an opponent to also check out case law provided to them by another party, just to make sure that it actually exists.
After 35 years of writing nonfiction, this is my first fiction book. The idea arose from the massive geopolitical changes since Trump took office just over 100 days ago. In writing the book, I have assumed that everything Trump says he’s going to do, actually happens. So the Gulf of Mexico is now the Gulf of America. Greenland and Canada are now America’s 51st and 52nd States. Just for good measure, I have also chucked in the former UK, now New Alaska, as America’s 53rd State, in return for signing away what remains of its oil, gas and mineral assets. It really was a no-brainer.
Caught between tariffs from both the U.S. and Europe. Having outsourced all of its manufacturing to China, and having closed down what remained of its industrial landscape, the former UK was no longer economically viable as a nation-state. Add to that Trump’s unilateral withdrawal from NATO and the Ukraine-style neutrality pact offered to former NATO members in its place.
Don’t worry about climate change. That has already happened. New Alaska is now a silent snow-scape punctuated only by the distant rumble of the extraction plant.
The story focuses on a Waco style cult church, which you can join but never leave. A charismatic hippie pastor who doesn’t only want your money. He also wants access to your wife. Yes – there really are communities like that. But it all turns to bloody murder when someone steals the source of his power.
Like everybody else I’m relieved that the UK government has been able to get the coking coal it needs to keep the Scunthorpe blast furnaces working. But what a disgrace that we had to rely on other countries halfway around the world to get that coking coal, when it’s already buried beneath our feet. What would have happened if the US and Australia had said ‘No’? Talk about shooting ourselves in the foot. Stupid!
Whilst Increases in stamp duty land tax taking effect 1st April 2025 are mainly geared towards private residential purchasers, local authority purchasers may not be not immune.
Save where a blanket relief can be claimed or for the very smallest transactions in terms of value, all local authority purchases will be affected by the reduction in the basic stamp duty threshold from £250,000 to £125,000. Add to that the 5% SDLT surcharge which is now added to all corporate residential purchases, including those below the new basic £125,000 threshold. Like every petrol purchase, SDLT can involve a tax-on-tax, particularly where a transaction is standard rated.
All of this is dead money which sucks resources out of tight local authority budgets, which might otherwise be applied towards regeneration. And whilst local authority conveyancers are not expected to have the expertise of a tax accountant, it is important to know enough about the calculation of property taxes to ask the right questions and to be able to query any tax-advice which appears to be wrong. It is about knowing what reliefs are available and being able to structure a complex transaction in the most tax efficient way.
Although there are many different taxes which can potentially affect property transactions, currently the three main property taxes are Stamp Duty Land Tax; Value Added Tax and Community Infrastructure Levy (where the council pays money to itself). We now look at each of these taxes in turn and examine the particular reliefs which are available to local authorities.
Stamp Duty Land Tax
The first thing to note is that different stamp duty land tax rates apply to residential and non-residential purchases. Generally, non-residential rates are more beneficial, not least because the 5% surcharge does not apply.
Although the difference between a residential and a non-residential transaction might seem obvious, that is not always the case. A purchase of a property which combines a mix of residential and non-residential use will be deemed non-residential. And although multiple dwelling relief has now been abolished, a local authority can still achieve a significant tax saving by electing to treat a single purchase of six or more dwellings as non-residential, by utilizing the exemption contained in Section 116(7) of the Finance Act 2003. The main blanket SDLT reliefs for local authorities are:
Registered Social Landlord Relief – which is only available to those local authorities who fall within that RSL category and then only for those affordable housing purchases which are grant-funded.
Transfer of property between companies – which may apply when a local authority is transacting with its own corporate subsidiary.
Compulsory Purchase Relief – which applies where a local authority is purchasing property under the umbrella of a compulsory purchase order (whether confirmed or not) but only where it is intended that the property acquired will be transferred on to a development partner. It will not apply to property acquired for development which the local authority is intending to carry out itself, although other reliefs might apply. The key purpose of compulsory purchase relief is not to make a transaction tax free but to avoid the double taxation which would otherwise apply when land is purchased and then transferred away in a back-to-back transaction.
Subsale relief – which, like CPO relief, Is intended to avoid a double tax liability in circumstances where a party contracts to purchase property and, before that transaction has completed, has transferred its contract to another party, who then steps into its shoes.
Even where blanket relief is not available for a complex transaction, it is still possible to reduce the stamp duty liability on a development transaction by structuring it in a way which ensures SDLT is only payable on the land value and not the entire development value of the transaction. Structuring a transaction in this way will generally involve separate standalone contracts for the land acquisition and another for the carrying out of the development, and with the bringing forward of completion of the land-transaction to Golden Brick, or earlier, which is the point at which a development becomes officially recognized as ‘residential ‘ and therefore zero rated for the purposes of VAT(see below). The key reference point when structuring a development purchase has to be SDLTM04015 of the Stamp Duty Land Tax Manual, “Scope – how much is chargeable: sale of land with associated construction contract Para 10 schedule 4 Finance Act 2003, which refers to the decision in Prudential Assurance Co Limited v IRC [1992] when Identifying the subject matter of the transaction for the purposes of stamp duty.
TOGC (Transfer as a going concern), also provides partial relief for some investment purchases, such as the landlord interest in a trading estate which is already fully let and where the local authority is stepping into the shoes of the previous landlord. Where a TOGC applies, SDLT will only be calculated on the net purchase price and not any additional VAT element. However this partial exemption can only apply when both the seller and the purchaser had waived VAT exemption before the transaction completes.
A practical issue for many local authority conveyancers, is how to ensure that tax which falls due on a transaction is paid within the required 14 days to avoid the automatic penalties which will otherwise apply. Any payment has to be correctly referenced so that it can be easily traced by HMRC and avoid follow-up query. Compliance with this 14-day deadline may not be problematic for a conveyancer who already holds funds on account. But it can be problematic for a conveyancer who is dependent on another department to ensure that payment is transmitted in a correct and timely way
Value Added Tax
A primary issue in any complex transaction is not only whether that transaction has been opted to tax but whether it should be opted to tax, to enable efficient recovery of vat on building or other construction costs. That is something which may require specialist tax advice. Remember also that a freehold sale of commercial new build is automatically subject to vat.. For all other cases the issue is whether there has been an option to tax. The default position is that non-residential transactions are exempt from vat. However the standard 20% will apply if it has been opted to tax. In most cases the imposition of a 20% VAT liability will be cost neutral in circumstances where the paying party is able to recover its VAT outlay as an input. Although as we have already seen, the charging of vat on a land transaction also has implications for the calculation of SDLT (see above). The imposition of vat on a property transaction will also be problematic for a charity or housing association which is unable to recover its vat as an input. That is the reason why many housing associations are advised to complete their purchases at ‘ golden brick’, when the transaction becomes zero rated for the purposes of VAT. Such zero rating also makes it easier for that housing Association to recover VAT on its own construction costs.
The issue of VAT on local authority transactions is particularly complex because it cannot be assumed that a local authority will be able to recover all of its VAT outlay, which in turn is dependent on whether the particular transaction can be classed as business, non-business or exempt. Official guidance on these issues is provided by VAT Notice 749: Local authorities and similar bodies, which helps local authorities and other public bodies decide which activities are business or non-business. Again, this is an issue on which specialist tax advice may be needed.
Community Infrastructure Levy (CIL)
Whilst affordable housing development by a registered social landlord will normally qualify for mandatory relief against CIL there are special rules for claiming it. The general rule is that Mandatory Social Housing Relief has to be officially claimed before the development commences and then only by an organization which is either the freeholder or which has a significant leasehold interest in the land affected. This is something which needs to be borne in mind when a local authority is working with a development partner which has yet to acquire its proprietary freehold or leasehold interest in the property but is still contractually obliged to get its development underway. In those situations it may be the local authority itself and not the development partner which has to make the formal application for that relief.
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V. Charles Ward Is a Senior Property Lawyer with HB Public Law and author of Local Authority Conveyancing Law and Practice (UK)
My heart always sinks when I see news footage of hobby eco-protesters standing outside a court building, waving placards, and celebrating the stalling of yet another commercial project. This time It was the Rosebank oil exploration project, off Shetland, in which Shell had invested £800 million and involved one of the largest undeveloped oil and gas fields in the UK continental shelf, containing an estimated 300 million barrels. And why do our most senior judiciary seem to think it is their mission to wave their green credentials to tease out the tiniest administrative flaw in the regulatory approval process, to send everything back to the drawing board? Who appoints these people? It follows hot on the heels of another court judgment crushing implementation of proposals to open Britain’s first new coal mine at Whitehaven, for more than 30 years. In each case, the judicial mantra was the same. “That the proposals failed to adequately assess the greenhouse gas emissions tied to burning fossil fuels.” And we know that with a government energy minister so opposed to fossil fuel extraction, that none of these projects are ever likely to happen. But haven’t these eminent legal brains slightly missed the point?
Yes – we know that burning fossil fuels causes climate change. Which is why we need to put in place viable alternatives .But neither the Rosebank nor the Whitehaven projects were about burning fossil fuels. They were about extracting fossil fuels so that we don’t have to import them from abroad. Either way. fossil fuels will still be burnt, because at the moment we have nothing else. And of course those projects would have also created thousands of well-paid jobs. So what is the point they are making? And it is entirely appropriate for me to refer to these eco-protesters as hobbyists, as none of them would have suffered direct personal detriment as a result of either of these projects. It is all about the big abstract ‘we’. And what message does it send to the outside world? A Britain which is so up itself that it is prepared to cut off its nose to spite its commercial face. Who would want to invest in us? The next big battle is going to be about the proposed third runway at Heathrow Airport. Even if it goes ahead, I’m not sure that I will still be around when it is completed. But that’s no reason not to support it.
I really blame the last conservative government for this farce. They had 14 years to drive these projects through. But instead they preferred to spend their time posturing about Brexit and their precious Rwanda scheme, as everything else around them fell apart. And they were a government which was in hock to the NIMBY lobby, which is why the cost of HS2 ballooned almost to the point of cancellation.
When it comes to the third Heathrow runway, I’m with Rachel Reeves. I know she’s had a bad press, but I’m convinced that she’s trying to do her best to grow the British economy. Again, so different from the last lot, the ‘party of business’. But even now, opposition to the third runway is cranking into gear, not least from London Mayor Sadiq Khan, who has promised court proceedings to try to stall the project.
Spending my money to fight a court case against his own parliamentary party? What is that all about? And he hasn’t even consulted me. A case of public money fighting public money. How wasteful. But that is Britain today.
BRUCE AND HOLLY 