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Aspiring Lawyers - Interviews & Vacation Schemes
Commercial Awareness Discussion
Commercial Awareness Update - January 2020
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<blockquote data-quote="Alice Manners" data-source="post: 19914" data-attributes="member: 3460"><p><strong>Flybe Rescue</strong> (by Heerim Hwang)</p><p></p><p><u>The Story</u></p><p></p><p>After being rescued by the consortium Connect Airways at the start of last year, Flybe, Europe’s largest regional airline, found itself in turbulence once more. On the 14th of January, the Exeter-based airline agreed with the government on a standard “Time to Pay” payment plan to defer tax payments reportedly worth “less than £10m” contrary to speculated figures around £100m. Flybe’s owners (Virgin Atlantic, Stobart Group, and Cyprus Capital) have also agreed to invest £30m to prevent the airline’s collapse. </p><p></p><p><u>Impact on Businesses and Law Firms</u></p><p></p><p>It is unclear, however, on the type of type of tax Flybe has been granted a tax holiday on. It is speculated that the government have agreed on extra time for Flybe to pay its Airport Passenger Duty (APD) bill. </p><p></p><p>APD is charged per passenger on a flight departing from the UK and all short-haul economy flights are charged £13. However, this tax is also applied on the return leg of the trip meaning the taxes on a return flight from Newquay to London will be twice the amount than a return flight from London to Paris, for example. </p><p></p><p>This has particularly affected Flybe as the airline serves almost two in every five domestic UK flights and ensures regional connectivity in this way. Because of this, the government have argued that Flybe is a “business airline” as opposed to a “holiday airline” in response to criticism over the handling of Thomas Cook. </p><p></p><p>The tax holiday, however, has caused uproar with other airlines such as Ryanair and International Airlines Group (the owner of British Airways) due to concerns that the deal breached state aid and competition law. The airlines argue that Flybe’s billionaire owners should be investing more instead of the taxpayer and that the APD tax break should be rolled out to other airlines to ensure fair competition. </p><p></p><p>However, this has been condemned by environmentalists and has raised concerns over whether the UK can be “net zero” by 2050. They also argued that routes deemed “socially necessary” (e.g Newquay to London) were already subsidised with state aid.</p><p></p><p><strong>US-China Trade Deal: Phase One </strong>(by Alice Manners)</p><p></p><p><u>The Story</u></p><p></p><p>After two years of tension, the US and China have signed a deal aiming to reduce trade frictions.</p><p></p><p>The agreement, which Trump has named the “greatest and biggest deal ever made,” has been evaluated as more of a truce; tariffs on around $360bn worth of Chinese goods will remain in place, although some have been reduced or removed.</p><p></p><p>China has committed to purchasing $200bn worth of US goods and services – in 2017 they purchased around $187bn. </p><p></p><p>Many of the fundamental sources of the US’s discontentment, including cybertheft, have not been resolved. ‘Phase two’ discussions are on the horizon, although many are sceptical about how soon. </p><p></p><p><u>Impact on Businesses and Law Firms</u></p><p></p><p>In light of the reduced tariffs, both US and Chinese businesses could now begin to ramp up investment. However, the uncertainty that the trade war caused, and the fear of further restrictions is likely to continue to hinder plans. Since the date for the deal was set, US stock markets have hit record highs. However, artificially generating China’s demand for US goods and services may not be sustainable, and if China do not reach this threshold further tariffs are likely to be imposed.</p><p></p><p>China had already began opening up its financial services sector to foreign investors but, having pledged a variety of measures which open its financial services sector to US competition, financial services groups should now have greater access to the Chinese market - albeit not equal access. Investment in the Chinese market and partnerships with companies could generate a significant amount of work for lawyers, particularly for the firms who have already expanded into China across a variety of commercial sectors.</p><p></p><p>China has also agreed to several improvements to intellectual property laws including a lower threshold for criminal prosecution, providing work for IP litigators. If compliance or interpretation of the deal is disputed, the agreement also contains a dispute resolution process, which, although described as simplistic, lawyers are sure to play a part in.</p></blockquote><p></p>
[QUOTE="Alice Manners, post: 19914, member: 3460"] [B]Flybe Rescue[/B] (by Heerim Hwang) [U]The Story[/U] After being rescued by the consortium Connect Airways at the start of last year, Flybe, Europe’s largest regional airline, found itself in turbulence once more. On the 14th of January, the Exeter-based airline agreed with the government on a standard “Time to Pay” payment plan to defer tax payments reportedly worth “less than £10m” contrary to speculated figures around £100m. Flybe’s owners (Virgin Atlantic, Stobart Group, and Cyprus Capital) have also agreed to invest £30m to prevent the airline’s collapse. [U]Impact on Businesses and Law Firms[/U] It is unclear, however, on the type of type of tax Flybe has been granted a tax holiday on. It is speculated that the government have agreed on extra time for Flybe to pay its Airport Passenger Duty (APD) bill. APD is charged per passenger on a flight departing from the UK and all short-haul economy flights are charged £13. However, this tax is also applied on the return leg of the trip meaning the taxes on a return flight from Newquay to London will be twice the amount than a return flight from London to Paris, for example. This has particularly affected Flybe as the airline serves almost two in every five domestic UK flights and ensures regional connectivity in this way. Because of this, the government have argued that Flybe is a “business airline” as opposed to a “holiday airline” in response to criticism over the handling of Thomas Cook. The tax holiday, however, has caused uproar with other airlines such as Ryanair and International Airlines Group (the owner of British Airways) due to concerns that the deal breached state aid and competition law. The airlines argue that Flybe’s billionaire owners should be investing more instead of the taxpayer and that the APD tax break should be rolled out to other airlines to ensure fair competition. However, this has been condemned by environmentalists and has raised concerns over whether the UK can be “net zero” by 2050. They also argued that routes deemed “socially necessary” (e.g Newquay to London) were already subsidised with state aid. [B]US-China Trade Deal: Phase One [/B](by Alice Manners) [U]The Story[/U] After two years of tension, the US and China have signed a deal aiming to reduce trade frictions. The agreement, which Trump has named the “greatest and biggest deal ever made,” has been evaluated as more of a truce; tariffs on around $360bn worth of Chinese goods will remain in place, although some have been reduced or removed. China has committed to purchasing $200bn worth of US goods and services – in 2017 they purchased around $187bn. Many of the fundamental sources of the US’s discontentment, including cybertheft, have not been resolved. ‘Phase two’ discussions are on the horizon, although many are sceptical about how soon. [U]Impact on Businesses and Law Firms[/U] In light of the reduced tariffs, both US and Chinese businesses could now begin to ramp up investment. However, the uncertainty that the trade war caused, and the fear of further restrictions is likely to continue to hinder plans. Since the date for the deal was set, US stock markets have hit record highs. However, artificially generating China’s demand for US goods and services may not be sustainable, and if China do not reach this threshold further tariffs are likely to be imposed. China had already began opening up its financial services sector to foreign investors but, having pledged a variety of measures which open its financial services sector to US competition, financial services groups should now have greater access to the Chinese market - albeit not equal access. Investment in the Chinese market and partnerships with companies could generate a significant amount of work for lawyers, particularly for the firms who have already expanded into China across a variety of commercial sectors. China has also agreed to several improvements to intellectual property laws including a lower threshold for criminal prosecution, providing work for IP litigators. If compliance or interpretation of the deal is disputed, the agreement also contains a dispute resolution process, which, although described as simplistic, lawyers are sure to play a part in. [/QUOTE]
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Commercial Awareness Update - January 2020
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