Crofters, Lawyers, VAT and a Grazings ‘Constable’

Crofters, Lawyers, VAT and a Grazings 'Constable'

Best to instruct a lawyer for legal advice and a chance of justice

I had thought my post on Crofters and Lawyers set the record straight as far as the question of crofters being entitled to engage the services of lawyers was concerned.

I also thought my post on Crofting VATgate and subsequent comments on that topic from Donald Rennie was sufficient to clarify that matter also.

But alas not for ‘Constable’ Souter. He felt it necessary to air his views once more (and ignore the points already made by me to him via this blog) in front of a large number of lawyers by submitting a letter for publication this week in Scottish Legal News. I reproduce here his letter and my response thereto:-

Grazings Constable Colin Souter responds to criticism – 12 September 2016

Colin Souter has written a response to a September 5 article by solicitor Brian Inkster. The views expressed below are not those of shareholders at Upper Coll Common Grazings or of Scottish Legal News.

As the Grazings Constable for Upper Coll, I took over under difficult circumstances, after the former Committee had been put out of office by the statutory regulator (Crofting Commission) for reasons too long to explore in this short piece. Mr Inkster had been engaged by the former Committee for legal advice, whilst they were in dispute with the Commission but apparently without the matter having been put to a wider shareholders meeting to receive the required majority/full vote. I sought to correspond with him in that capacity, having determined that the Crofting Act 1993 does not permit the use of shareholders funds by the Committee for that purpose. Activity may only be funded where it is for the “maintenance or improvement of the Common Grazing”.

I sought Mr Inkster’s co-operation in re-paying the £600 he received as payment. Mr Inkster has refused to acknowledge or respond to my correspondence but is happy to report and comment upon it, and many other related issues, to readers of his on-line blog.

Mr Inkster has presented a series of speculations, opinions and inferences in his VAT article, without demonstrating any desire to obtain a definitive outcome for those involved. I might be forgiven, I hope, for wondering why, if an expert on the subject, Mr Inkster does not already know definitively whether Committees are eligible to register for VAT and if raised as a legal point, surely it is in the interests of all parties to understand if they have somehow incurred a liability with potential for penalties? The fact of the matter, which undermines Mr Inkster’s conspiracy theory is quite simply that the former Committee included VAT in their annual Statement of Accounts presented to the Crofting Commission but set it out in a way that raised more questions than answers and whilst I am now speculating, I think it reasonable to conclude that the Commission, in responding to a review of those accounts, was left with little alternative other than to seek opinion from Senior Counsel to help address the matter. Senior Counsel, much respected in crofting circles, opined that there was no power for Grazings Committees to trade or to register for VAT under the Crofting Act 1993.

With ownership of the issue at Upper Coll and the need to resolve the matter, I brought it to HMRC and await their definitive response on the matter. If they determine the eligibility criteria have been met for registration, I will be delighted and can sign-off on one more point. If the contrary is true, then I have advocated for a “no-penalty resolution” to apply to all Grazings Committees who may be in a similar situation. The suggestion by those who align with Mr Inkster that being registered must mean they are entitled to be registered, clearly ignores the possibility that registration was made in error by those unaware of the legal status of Grazings Committees under the Crofting Act. Not a difficult scenario to envisage, I’d suggest.

I can only hope Scottish Legal News readers will appreciate my need to ensure shareholders interests at Upper Coll are properly protected and that the future framework in place for the management of the Grazings, when my short term in office expires, will be a legally compliant one. Liabilities will have been exposed for discussion and debate, and as far as possible, remedied. Given the circumstances, however, I cannot promise the remedies will satisfy everyone………least of all Mr Inkster.

Colin Souter
Grazings Constable
Upper Coll

Crofters, Lawyers and VAT – 13 September 2016

Brian Inkster addresses yesterday’s response from Colin Souter to criticism the latter had received.

Colin Souter responded yesterday via Scottish Legal News to my concerns regarding the Crofting Commission investigating the legality of VAT registration of Grazings Committees.

My views attacked the Crofting Commission on this issue and called on an investigation by Fergus Ewing MSP, as cabinet secretary responsible for crofting, into what I considered could be dubbed ‘VATgate’.

It seems rather odd that a grazings ‘constable’ purportedly appointed by the Crofting Commission to manage the affairs of one particular common grazings on the Isle of Lewis should be acting as spokesman for the Crofting Commission on the issue. That is surely the responsibility of the Convener of the Crofting Commission.

That Mr Souter saw fit, at the same time, to draw to the attention of many solicitors that he considers them not entitled to be paid for legal services provided to shareholders in a common grazings is bold indeed.

Firstly, it must be remembered that I do not consider Mr Souter to have been legally appointed. Indeed it has been shown that the Crofting Commission acted contrary to its own legal advice in making the appointment. However, having made an illegal appointment the Crofting Commission are of the view that they cannot revisit that ‘final decision’.

On the basis that I do not recognise Mr Souter as having any legal standing whatsoever I am not about to respond to his demands to repay to him fees legitimately paid to my firm by a properly constituted grazings committee following the provision of legal advice to them.

Mr Souter has threatened to raise a small claims action against my firm and I am more than happy to see him in court. He is well aware that in such circumstances the Crofting Commission will be brought in as a party and there will be a counterclaim for the time, inconvenience and costs caused to me unnecessarily by Mr Souter.

A right for crofters to instruct lawyers does not need to be contained in tablets of stone within the Crofting Acts. It is a fundamental human right. The Magna Carta would be a good starting point for Mr Souter to look at!

Shareholders in common grazings have been instructing lawyers to represent and provide them with advice in numerous matters over many years. Is Mr Souter really suggesting that all those lawyers need to repay fees received for work undertaken and advice given?

Is Mr Souter really saying that shareholders could not have a lawyer representing them in an action brought against them in the Scottish Land Court?

Does Mr Souter really think it is okay for the Crofting Commission to hire top QCs in their questionable battles against shareholders in common grazings but that those shareholders cannot be afforded access to lawyers themselves?

Has Mr Souter not read the Guidance Notes issued by the Crofting Commission on the Management and Use of Common Grazings? These Guidance Notes contain an “Important note” that reads:-

The following guidance is intended to assist grazings committees with regard to the use of grazings regulations. The guidance does not constitute legal advice, and should not be construed as such. Should a grazings committee and/or shareholder require legal advice on a matter concerning common grazings, independent legal advice should be sought from a suitably qualified solicitor.

So even the Crofting Commission acknowledge and accept that shareholders can and should seek their own independent legal advice.

Where on earth does Mr Souter get the idea from that they can’t?

I will now return to the original and more important question involved, namely VAT registration of Grazings Committees.

Mr Souter refers to me as “an expert on the subject”. I have, for the avoidance of any doubt, never been and certainly would not profess to be an expert on tax law or any matter concerning, in particular, VAT.

My concern is as an expert in crofting law advising crofters daily on that particular subject. My concern is that the Crofting Commission whose function is to regulate and promote the interests of crofting may instead be actively seeking to deprive crofters of VAT receipts.

VAT registration of Common Grazings was something that the Scottish Government insisted upon as part of entry into Woodland Grant Schemes. Did Mr Souter know that? Did the Crofting Commission advise their QC of that when seeking an opinion on the matter? Is the Scottish Government happy that Mr Souter and the Crofting Commission are challenging their policy on Crofters, Forestry and VAT?

Mr Souter says that he “can only hope Scottish Legal News readers will appreciate” his “need to ensure shareholders interests at Upper Coll are properly protected”. Is seeking to deprive them of VAT receipts protecting their interests?   As Donald Rennie, Honorary President of the European Council for Rural Law, stated on the Crofting Law Blog:-

Let us for the moment assume that Mr Souter was properly appointed a grazings constable. In that office he would be a trustee for behoof of the Upper Coll crofters as beneficiaries. As a trustee his duty would be to protect the assets and income for the beneficiaries. In the event that his blundering and unnecessary interference results in the abilty to reclaim VAT being lost he will be liable to reimburse the crofters for the losses. The measure of damages would be the total expected VAT reclaim lost from the date of his interference until VATable receipts came in.

This is in addition to any other damages claims to which his improper and negligent acts and omissions expose him.

I have written to Fergus Ewing MSP expressing my concerns about this illegal ‘constable’ being allowed to wreak havoc by the Crofting Commission. I have copied my letter to Mr Souter out of courtesy. Mr Ewing has already had to rein in Convener Colin Kennedy. Now it is time for him to rein in another Colin.

Brian Inkster

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