Should You be Worried About The New Telecoms Code?
Following the passing of the Digital Economy Act in 2017, landowners have started to become aware of a new telecommunications code ("Code") which will govern the way in which telecoms operators might install or keep installed electronic communication apparatus on their land.Normally this will consist of a mast with antennas either on a field or rooftop or it might consist of cabling across land or into buildings. For many of those landowners the Code has come as an unpleasant surprise. Some of the reasons for this are:
Reduced consideration (rent)
The Code has introduced a new test for how consideration (rent) will be valued. The intention was that the new valuation method would reduce the amount that operators would need to pay. The Government's impact assessment undertaken in 2016 expected that the reforms would reduce landowners' rents by 40%. However, the operators have used the Code to demand significantly greater discounts to the rents and it has not been uncommon for reductions of 90% or more to be demanded in the case of existing infrastructure and with very small rents being offered for new infrastructure. This has made landowners reluctant to have the infrastructure on their land. Initially the Upper Tribunal (Lands Chamber) ("Tribunal") which has been tasked with dealing with any disputes pursuant to the New Code accepted that the rents might be very low but more recently the Tribunal stated "We are not persuaded that the tiny sums suggested…take into account the understandable reluctance of rural landowners to lose control of their land to the extent that entry into an Agreement for Code rights is likely to entail". As a consequence we may be starting to see improved terms being offered by some of the operators.
Removing the operator
It has always been difficult to remove a telecoms operator from land but the Code has made the process for removal even more difficult. A landowner must serve at least 18 months' notice if he wants to terminate the occupation of the operator and that notice can only expire on or after the term end date unless there is a break clause. Even where notice has been served the landowner will only be able to take back possession in specific circumstances (set out in the Code) or if the operator agrees to voluntarily vacate the land. Furthermore, the old statutory right to lift and shift the electronic apparatus has been removed by the Code. It may be possible to improve the position by agreement with the operator and we are finding that some operators are willing to sensibly engage on the terms.
Problems with development
A mast or other electronic apparatus may sometimes have a detrimental effect on the ability of the landowner to develop their land. This can be because the apparatus is on the land itself or because the terms of the agreement with the landowner prevent the landowner from being able to undertake certain works on their adjoining land. Obviously, the operator will not want anything the landowner does on their land to interfere with the operation of the mast or equipment and may want wide rights over some of the land in order to properly operate. Whilst the Code does allow a landowner to resist the imposition of electronic apparatus on land they want to develop the landowner will need to prove their intention to develop and this can be difficult. The same applies when seeking to terminate the agreement on the grounds that the landowner wants to develop. Where there is a genuine intention to develop the land then it should usually be possible to prevent or remove the operator but not without properly following the process set out in the Code and engaging with the operator constructively as soon as possible.
Landowners will often be very concerned about incurring significant cost in dealing with Code agreements due to the low value. This is despite the fact that operators will normally make a contribution to those costs.However, operators will not pay the landowner to dispute whether electronic apparatus can be installed. They will only pay for negotiations for the Code agreement to be put in place. Although the value might be low the consequences of having a Code agreement imposed can be significant and should therefore be taken seriously by all landowners.
The above article was written by Dan Cuthbert. Dan is a partner at Foot Anstey and can be contacted on email@example.com or 01179 154932.
The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.
Winter Economy Plan
As the country continues to struggle with the social and financial effects of Covid-19, Rishi Sunak has today announced further measures to help those most affected.
Job Support Scheme
The Chancellor confirmed that the current furlough scheme is to end on 31 October. This is being replaced by a Job Support Scheme, which is aimed at protecting viable jobs in businesses who are facing lower demand over the winter months.
Under the scheme, which will run for six months and help keep employees attached to the workforce, the government will contribute towards the wages of employees who are working fewer than normal hours due to decrease in demand. Employers will continue to pay their employees for the hours worked, but for the hours not worked, the government and the employer will each pay one third of the equivalent salary.
Eligible employees must be working at least 33% of their usual hours, with the level of grant being calculated based on the employee’s usual salary, capped at £697.92 per month.
All small and medium sized businesses can apply for the scheme, even if they have not previously used the furlough scheme it replaces. However, large businesses must show that their turnover has fallen during the crisis to make a claim.
This scheme will run for six months from the 1st November.
Self Employed Income Support Scheme
The Self Employed Income Support scheme, which is currently in its second phase, will be extended to cover income lost between November and January 2021. The initial lump sum will cover three months’ worth of profit, and is worth 20% of average monthly profits, up to a total of £1,875.
An additional grant, which may be adjusted to respond to the changing circumstances, will be available for self employed individuals to cover the period from February to the end of April.
Tax cuts and deferrals
The 15% reduction in the VAT rate for tourism and hospitality sectors is to continue to the end of March next year, meaning businesses in the sector will only need to charge 5% VAT. This will give businesses in the sector, which has been the most severely impacted by the pandemic, the opportunity to retain staff as they adapt to new trading environments and laws.
In addition, businesses who deferred their VAT payments will be able to take advantage of the New Payment Scheme, which gives them the option to pay the liability back over smaller instalments. Rather than paying a lump sum at the end of March next year, businesses will be able to make 11 small interest free payments during the 2021/22 financial year.
For self assessment taxpayers, they will be able to benefit from a 12 month extension on a ‘Time to Pay’ facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until 2022. Although this might provide some much needed cashflow relief, please bear in mind that this may leave you with a large payment to make in January 2022, so if you have the cash available now, it may be worth making the payments as planned.
Government backed loans
A new ‘Pay as You Grow’ repayment scheme was announced for those businesses who took out a Business Bounce Back loan, whereby the term of the loan is extended from six to ten years, which will cut the months repayments by nearly half. Interest only periods, of up to six months, are also available, as well as repayment holidays.
The term of the Business Interruption Loan has also been extended from six to ten years.
These loan schemes, as well as those for larger businesses, have been vital in keeping business afloat during the pandemic, and therefore the application deadlines have now been extended until the end of November, ensuring businesses who are seasonally effected can still apply.
For further information on any of the above, please visit the government website below:
As we continue to face challenging times, and it is now more important than ever to take stock and ensure that you are well placed to tackle the winter months during such an uncertain time. If we can be of assistance in any way, then please do not hesitate to contact us.
All information is correct at 24 September 2020.