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Crofters, Lawyers, VAT and a Grazings ‘Constable’

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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

Crofting Commission knew they were acting illegally in appointing Grazings Constables

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Go to Jail Crofting Commission

Time for the Crofting Commission to feel the full force of the law

The Crofting Commission knew that if they removed grazings committees from office they couldn’t legally appoint grazings constables. Their own policies and procedures dating from 5 August 2015 said so yet they have contravened those on at least three occasions since 9 December 2015.

A Report by the Chief Executive of the Crofting Commission [PDF], Catriona Maclean, was put before a meeting of the Crofting Commission on 5 August 2015. This report considered the rationale for the Commission appointing grazings constables and what requirements need to be considered when so doing.

In considering the situation where the Crofting Commission can remove from office grazings committees under section 47(8) of the Crofters (Scotland) Act 1993 the Report by the Chief Executive states:-

There is a presumption that the most obvious occasion for the Commission to appoint a
constable is in the context of Section 47(8). This is where the Commission has had occasion
to remove all members of a grazing committee from office and can appoint other persons in
their place. The implication of this subsection appears to be that the Commission may
remove individual or all members of a committee and replace an individual or all of the
committee. There does not appear to be a direct cross over with Section 47(3) which allows
the Commission to directly appoint a constable as a substitute for the grazing committee.
The appointment of a constable appears to be where the shareholders fail to appoint a
committee and not where the Commission removes a committee from office. Accordingly
there would have to be an opportunity for the shareholders to elect another committee and
only where they fail to do so, should the Commission consider appointing a grazing
constable.

This paper was approved by the Crofting Commission at their meeting on 5 August 2015 [PDF].

A further paper [PDF] was considered by the Crofting Commission at a February 2016 Policy in Development meeting. In that paper it was, somewhat alarmingly, stated:-

There is a degree of irony in that the Commission may be requiring grazing committees to adhere to regulations while not being clear about the procedure it is itself employing in directing this.

This further paper also reaffirmed the position set out in the earlier one in connection with the position where a grazings committee is removed from office:-

The Commission has previously accepted that a grazing constable is not appointed at this stage.

A complaint workflow was also introduced in this latest paper with no mention of the appointment of a grazings constable in such circumstances but instead, as per the law, the appointment of a new clerk and members of the committee.

This complaint workflow was adopted by the Crofting Commission [PDF] at their meeting on 4 May 2016 [PDF].

Thus the Crofting Commission were fully aware and accepted that if they removed a grazings committee from office they could not legally replace them with a grazings constable. That position accords with my own view on the matter and also the view held by Donald Rennie.

However, despite this they proceeded to remove two grazings committees in Lewis and one on the Scottish mainland and appoint grazings constables in their place on 9 December 2015, 3 May 2016 and 10 May 2016 respectively.

In so doing they acted contrary to their own policies and procedures and, it is assumed, contrary to the legal advice that they had received. Thus they, as I and Donald Rennie have maintained, acted illegally. What is now clear is that they acted illegally in the full knowledge that they were so doing.

In light of this astonishing behaviour on the part of the Crofting Commission serious questions must now be asked by the Scottish Government as to how and why this happened. Furthermore, the continuing position in office of whoever took the decisions to appoint grazings constables contrary to accepted policy, procedure and the law must now be in question.

Brian Inkster

Grazings Constables Risk the Clink

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Frank Serpico would never have accepted a job offer from the Crofting Commission

Frank Serpico would never have accepted a job offer from the Crofting Commission!

The Crofting Commission have, as part of the alleged abuse of power on their part over ‘The Common Clearances‘, been appointing Grazings Constables to replace the grazings committees that they have evicted from office.

I have blogged on the illegality of appointing Grazings Constables in such circumstances. This viewpoint has been backed up by Donald Rennie, an eminent expert in agricultural law and Honorary President of the European Council for Rural Law.

In a letter, that was published in both The Scottish Farmer and the West Highland Free Press last week, Donald Rennie highlights the potential difficulties for both the ‘Grazings Constables’ and the Crofting Commission of these illegal appointments.

With the kind permission of Donald Rennie, I now reproduce his letter here, in its entirety:-

I cannot allow the “Open Letter” from the Chief Executive of the Crofters Commission to pass unchallenged, especially as the Commission have exposed the unfortunates imposed as “Grazings Constables” to the risk of personal liability for tampering with the crofters’ money.

Ms MacLean says that there has been speculation about the interpretation of the Crofters (Scotland) Act 1993 and that “The commission is confident that it is applying the law correctly but this can only be clarified by the Scottish Land Court.” Both of these statements are self evidently false.

It is clear from an honest reading of section 47 of the Act that the Commission has no power to appoint a grazings constable in the present situation.

Their only power to appoint a grazings constable is to be found in section 47(3). That subsection applies where the crofters have not used the democratic provisions of the Act to appoint a grazings committee. In that case the Commission may step in and appoint either a grazings committee or a constable. That is not the situation here.

Under section 47(8), if the Commission are satisfied that the members of a grazings committee are not carrying out properly the duties imposed on them by the Act, the Commission may remove from office any or all such members and may appoint or provide for the appointment of other persons in their or his place. In other words, if the Commission remove one or more members of a committee they may appoint substitute members of the committee. They have no power conferred by this subsection to appoint a grazings constable.

The Commission was created by Act of Parliament. If the Act of Parliament does not give them the authority to do something then they cannot legally do it. subsection 8 is the only part of the legislation which permits the Commission to interfere in the democratic process of the operation of grazings committees. There is nothing in this subsection which permits the appointment of a grazings constable and therefore the actions of the Crofting Commission in purporting to appoint grazings constables are clearly illegal.

There is no point in applying to the Scottish Land Court for a ruling. It is a waste of time and money to seek a judgement to confirm the self evident.

Each purported grazings constable is in bad faith in the holding of his purported appointment. Ignorance of the law is no excuse. In addition it has been explained to the so called constables that their appointments are nullities. They cannot therefore claim ignorance of the illegality of their positions.

Section 47(7) is the only provision dealing with the constable’s right to remuneration. It provides that “The term of office of a grazings constable appointed by the Commission under subsection (3) above shall be such as may be specified in the instrument by which he is appointed, and he shall receive such annual remuneration as the Commission may determine; and such remuneration shall be defrayed by an assessment levied in such manner as the Commission may deem reasonable on the crofters who share in the common grazing.” Nothing is said in this subsection about appointment in terms of subsection 8 which reinforces the view that the appointment is illegal.

If a constable is validly appointed, this is the only provision allowing for his remuneration and it states clearly that the remuneration shall be paid by the crofters. The Commission has no power to use its own funds to remunerate the constable and if they purport to do so then it is a matter for Audit Scotland to investigate.

But these purported constables have not been appointed validly under subsection 3. Therefore there is no basis on which they are entitled to remuneration. From this it follows that if a purported constable takes as much a penny piece from the crofters sharing in the common grazing, with intent permanently to deprive them of that money, he is at serious risk.

Comment from the Crofting Law Blog:-

I wholeheartedly agree with everything Donald Rennie says in his letter. The law on the matter is simple and straightforward as set out clearly by him.

I have asked the Crofting Commission to explain where in law they have the power to appoint Grazings Constables in such circumstances. The only response to date has been:-

The Commission’s understanding is that this was a final decision and the Commission has no authority to revisit its own decisions in these circumstances.

This could imply (in the absence of any argument to the contrary) an acceptance on the part of the Commission that they couldn’t in law appoint a Grazings Constable but, having done so, they had no ability to revisit and reverse that decision. However, as Donald Rennie points out, there is no need for the Commission or anyone else to do so “to confirm the self evident”.

In my next blog post I will reveal the fact that, having stated that it has “no authority to revisit its own decisions in these circumstances“, the Crofting Commission went on to do just that and compounded their first illegal decision with yet another one (or maybe two)!

Brian Inkster

Image Credit: Serpico © Artists Entertainments Complex, Inc. Produzion De Laurentiis International Manufacturing Company S.P.A.