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Introduction To Law For Accountants Assignment
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Different governments impose different laws to control business operations in their countries. The aim of this report is to examine the principles and system of law-making in the UK. The main focus has been given to the classification of UK law and its sources. Moreover, the impact of the law-making process of the UK on commercial financial organization has also been discussed in this report.
Systems and principles for law-making in the UK
The "House of Lords" or the "House of Commons" is the two houses where a bill can be introduced. The debate, review, and amendment stages are performed by both houses for establishing the bill (Parliament, 2020). The decisions of both houses are considered before the bill gets approval from the monarch.
The stages of the “Lord phase'' that a bill must go through are discussed below.
First reading: During this stage, the bill arrives in front of the Lord for the first time in order to be read. At this official stage, the measure's name is read out in the chamber.
Second reading: The main debate on the goals and focus points of the measure is discussed in this stage (Tiley and Loutzenhiser, 2018). Members discuss any problems or specific areas where they think adjustments could be needed at this time. Normally, at this time, there are no vote divisions.
Committee Stage: At the committee stage, the text is carefully read line by line and amended. The bill is read by the members from the front to the back. In order to decide if to implement the changes, votes may be taken. No time limit applies, and any member may participate.
Stage of the report: Another chance to review and amend the legislation. In order to determine whether the changes should be made, more amendments are discussed and voted on (Ross, 2019)).
Third reading: This is a vital phase intended to plug any gaps in previous decisions. A final opportunity for votes and amendments is given in this stage. A bill law may be amended by the Lords, and if so, such changes are submitted to the other members for approval. The members have three options, which are adopting the Lord's amendment, replacing it with one of its own, or rejecting it. The Lords receive any Commons amendments. As per the view of Furse (2021), 'Ping pong' is the name for the process, which may involve numerous rounds. Once both Houses agree on the text, the bill receives royal assent, which makes it a law or "Act of Parliament."
Bill amendments from the Lords
Prior to the committee phase, the report phase, and any subsequent committee stage, members might propose some amendments (Tiley and Loutzenhiser, 2018). Each bill's requested amendments are listed together with the changes made at every stage and every day. Each change is shown in the order that it affects the language of the law. Amendments are typically gathered before each debate so that they can be addressed collectively.
Classifications of law
"Public law" and "private law" as well as “criminal law” and “civil law” are the two divisions of UK law (Mr college, 2021). Public law regulates interactions between citizens and the government, while private law controls interactions between an individual and a for-profit corporation. Maintaining stability in society and politics is the ultimate purpose of criminal law. Civil law seeks to settle disputes between individuals or groups. The damage's payment or the entry of a pecuniary judgment or agreement are typical, though not invariably, components of civil law processes.
Some laws that fall under public law are discussed below-
Constitutional laws: The current "UK constitution" is made up of statutory law and important judicial rulings, in addition to a number of conventions or informal constitutional practice standards (Tombs and Whyte, 2019). For instance, the surviving authority of the monarch and the relationship between the Parliament and the king is still governed by these unwritten but nonetheless binding traditions.
Administrative law: In the UK, judicial review is the only process used to construct administrative law. Judges can hold government bureaucracy agencies responsible for activities that had an impact on the people of the United Kingdom by establishing administrative law (Parliament, 2020)). They can hold those in the government with the executive authority responsible. “The Judicial Review Court” bases its decisions on a decision made by a bureaucratic agency on two fundamental principles:
- use of governmental authority
- Protection against Power Abuse
Municipal laws: In contrast to international law, municipal law is the native, local, or sovereign state's internal law (Mr college, 2022). In addition to national law, municipal law can also refer to territorial, regional, state, provincial, or local laws. Municipal governments enact regulations in regard to things like zoning, parking bylaws, and smoking in public places.
Criminal laws: The criminal law specifies what constitutes a crime, as well as the guidelines and processes that must be followed when:
- An investigation is conducted by the police into an alleged crime,
- charges are brought by the prosecuting authorities,
- and an appearance in court is required.
International laws: For international law to have a domestic impact, it must be applied domestically by Parliament (The University of Law, 2020). The UK is still subject to the commitments it has agreed to at the international level, and international law continues to apply to it.
As already established, civil law also refers to private law. The following legal specialties are included in this category:
Contract law: Although it is rare, neither written nor verbal contact is required for the creation of a contract, agreements can often be made orally (Subject guides, 2022)). Despite this, a verbal contract between parties may have the same lawful weight and significance as a written agreement.
Property law: Property law also referred to as real estate law deals with transactions involving both commercial and residential property and includes specialised fields including mortgage lending, social housing, and property financing (The University of Law, 2020).
Law of torts: Under English tort law, damages for violations of people's rights to their physical well-being, clean environment, property, financial interests, or reputations are compensated (Ross, 2019). In civil law, opposite to criminal law, a "tort" is a dispute that typically entails payments of money to compensate for damage that has been committed.
Labour law: In the UK, labour law regulates the interactions of employers, unions, and employees (Furse, 2021). Anyone working in the UK is entitled to a basic set of employment laws that can be recognized in laws, common law, parliamentary acts, and equity.
Corporations law: Interactions between workers, unions, and employers are governed by labour law in the UK. Every employee in the UK has access to a basic set of job rights that are outlined in parliamentary acts, rules, equity, and common law (Tombs and Whyte, 2019).
Commercial law: "British commercial law" is the body of law that regulates the selling and acquisition of services and goods when doing business in the UK.
Competition law: Chapter I of the "UK Competition Act 1998" forbids contracts between two or more enterprises, decisions taken by associations of undertakings, and coordinated acts that might have a negative effect on trade inside the UK (Ross, 2019).
Sources of law
The main sources of UK law are legislation, case law, EU law, and the “Human Rights Convention of Europe'' which are discussed below.
Legislation: Legislation, often known as statutory law, is the term used to define a country's written laws. In the UK, the term "legislation" frequently refers to an act of parliament, while its fullest definition also includes laws that have been passed relying on the authority provided by such acts (Subject guides, 2022).
Case law: Case law, or "judge-made law" is the primary body of law that influences the idea of precedent in the "English Legal System" and is reported in legal publications (Furse, 2021).
EU law: Retained EU Law is a subset of domestic law that was established at the conclusion of the transition phase and comprises laws derived from the EU that the "European Union (Withdrawal) Act 2018" decided to keep in our domestic legal system. It was never intended for Retained EU Law to remain on the books indefinitely (Gov, 2021).
Human Rights Convention of Europe: The following are the actual rights and liberties guaranteed by the Convention: The right to life is stated in Article 2. Article 3: the ban on torture and other cruel or inhumane treatment. Article 4 forbids both forced labour and slavery (Gov, 2021).
Impact of UK law-making process on commercial financial organisations
There are several tax laws that apply only to banks in the UK, such as the:
"The Bank Corporation Tax" Surcharge, or Bank Levy
- Bank Taxation Code of Practice
- Restrictions on bank loss relief
- Limitations on tax reduction for payments to banks as compensation (Grant Thornton, 2022)
This can have a direct negative on the process in which the multinational organization might operate. Increased corporation tax that is 19% in 2022 for banks creates pressure to increase their service cost.
“Employment Rights Act 1996”, “National Minimum Wage Act 1998”, and "The Health and Safety at Work, etc Act 1974"exist to guarantee that each employee is treated fairly in their own work surroundings and that all of their rights as employees are upheld. In the case of "Mr. P McCool v Unilever UK Ltd '', it has been seen that the claimant got compensation from the company for unfair dismissal (Case mine, 2020). Thus, these laws can be helpful for the multinational company to develop an effective employee-employer relationship in the UK finance sector.
Over 900 billion pounds worth, or 10%, of UK bank assets, have been estimated to have already left the UK for the EU or are now moving there (Independent, 2020). The relocation of 7,400 financial services jobs has sparked worries that future employment growth may take place in the EU instead of the UK. This may limit the MNC's capacity to bring in low-cost labour for their business.
A new trade agreement, known as the "UK–EU Trade and Cooperation Agreement (TCA)", was negotiated between the UK and the EU (UK finance, 2022). Under the terms of this agreement, the UK and EU regulatory regimes will not be bound by quota-free and tariff-free access to each other's markets. This is also an opportunity for the MNC to generate more profit through international business.
In the UK, there are three main regulators who oversee banks, including the: “English Central Bank (BoE)”, the BoE's "Prudential Regulation Authority (PRA)" is one of its divisions, and "The Authority for Financial Conduct" (FCA). The Bank of England declares a recession in the UK as interest rates are increased to 2.25%. Physical and transitional risks are the two main "risk factors'' or channels for the MNC through which financial risks due to climate change emerge (The Guardian, 2020).
The "Data Protection Act 2018" is a specific set of data protection legislation in the UK (Tombs and Whyte, 2019). The DPA, the UK's "version" of the GDPR that incorporates GDPR into national legislation, imposes compliance requirements on businesses that process personal data (including worker data and business contact data).
Organizations must confirm with the UK ICO if they must pay a "data security fee" before proceeding. The following factors will affect the fee amount of the MNC in the UK.
- number of employees that the organisation has.
- annual revenue of the organisation during the previous fiscal year.
Recommendation
- According to the Legal positivism theory, the social context of a country must be considered to make a law successful (Spaak and Mindus, 2021). Based on this theory, the ways that the MNC might adapt to reduce their tax obligations include tax credits, expensing, and accelerated depreciation guidelines for employee stock options. This can be done through employing family members, building retirement funds, contractual employees, and charitable contributions.
- As per “Moral interpretivist theories of law”, an institution must take the responsibility to maintain the legal rights and obligations of people (Bustamante, 2019). In this context, equitable hiring procedures that promote applications from senior employees can help this MNC to attract employees at a cheap cost. On the other hand, flexible scheduling, encouraging and facilitating access to training possibilities for all employees, phased
Conclusion
The main two houses where decisions regarding decisions are made are the "House of Lords" and the "House of Commons". The law of the UK can be classified into two categories that are civil and criminal laws and public and private laws. Due to Brexit and other stringent business laws in the UK, people might face the challenges of the high tax rate, labour shortage, and reduced profit. It has been seen that the administrative law must safeguard the populace from governmental violations of their civil rights and freedoms, but it also has a limit on how much power the government can exercise. Government must be able to carry out its duties. The two principles, therefore, need to be in harmony with one another. Tax credits and equitable hiring procedures have been recommended for the MNC to enter into the UK commercial financial sector.
References
Bustamante, T., 2019. Law, moral facts and interpretation: A Dworkinian response to Mark Greenberg’s moral impact theory of law.Canadian Journal of Law & Jurisprudence,32(1), pp.5-43.
Case mine. (2020). Mr P McCool v Unilever UK Ltd Available at: https://www.casemine.com/judgement/uk/60825e172c94e06d625bc466 [Accessed on 30th October 2022]
Furse, M., 2021.The Criminal Law of Competition in the UK and in the US: Failure and Success. UK: Edward Elgar Publishing.
Gov. (2021). Rates and allowances for Corporation Tax. Available at: https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax#:~:text=On%2023%20September%202022%2C%20the,would%20no%20longer%20go%20ahead [Accessed on 30th October 2022]
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