Hurdle meaning

The Prudential Assurance Company Ltd v HMRC [2024] EWCA Civ 300 The Prudential Assurance Company Ltd (Prudential) acted as the representative member of its VAT group. Another company in the group, Silverfleet Capital Ltd (SCL), executed an investment management services contract to provide services to Prudential. Under that contract, SCL was also eligible for a management fee and deferred performance fees once a specified hurdle rate was achieved. Under section 43 of the Value Added Tax Act 1994 (VATA 1994), no VAT was payable on the management fee because they were in the same VAT group. In 2007, SCL exited the VAT group. In 2014 and 2015, the triggers for paying the further deferred performance fee were satisfied and SCL invoiced Prudential for over £9m in total. The question before the Court of Appeal was whether those additional performance fees ultimately constituted consideration for a supply made while both companies were members of the same VAT group or, alternatively, whether the services amounted to a continuous supply of services...

Wesson (Chair of Friends of Mill Road Bridge) v Cambridgeshire County Council [2024] EWHC 1068 (Admin) What are the practical implications of this case? Two practical themes arise. The first concerns procedure for challenges under RTRA 1984, Sch 9, para 35, where the court delivered two generally applicable points. On summary judgment, the discussion at paras [7]–[11] culminates in a caution at paras [10]–[11]: in many instances the correct course is to proceed straight to a substantive hearing. It is a clear indication that using a summary judgment application in para [35] matters as a surrogate for a judicial review permission stage is inappropriate. The second point reiterates that an Order impugned under para [35] will only be quashed if, in accordance with RTRA 1984, Sch 9, para 36, the applicant has suffered substantial prejudice (see paras [126]–[127]). On that basis, the claimant’s first ground was struck out because no substantial prejudice was shown—a reminder of the hurdle that prospective challengers must meet...

Collins and others v Wind Energy Holding Ltd [2025] EWHC 40 (Comm) What are the practical implications of this case? The ruling reinforces the formidable threshold that section 68 challenges must clear. Section 68 functions as a longstop safeguard for cases where a tribunal has seriously mishandled the arbitration in one of the ways identified in section 68(2). Court intervention is reserved for situations that are far removed from what could reasonably be expected of the arbitral process. The judgment also reconciles section 33 duties: on one side, ensuring each party a fair chance to put its case and answer the other’s arguments; on the other, preventing unnecessary delay or expense. Whether a tribunal has discharged these obligations is a context-specific question in every matter. It is a stringent standard, triggered by exceptional departures from proper process. The inquiry is fact-sensitive and context‑dependent. Here, the court found the claimants had adequate opportunity to address issues concerning the freezing order and to obtain legal representation, yet made no genuine...

There are five key steps to improving efficiency: define which process requires improvement (see Practice Note: Improving efficiency: Step 1—identify and define the problem) measure the issue (covered in this Practice Note) analyse the information (see Practice Note: Improving efficiency: Step 3—analyse what’s causing the problem) enhance the process (see Practice Note: Improving efficiency: Step 4—improve the problem) control, ie embed the new approach so it becomes business as usual (BAU) (see Practice Note: Improving efficiency: Step 5—embedding changes) Management consultants typically label this the ‘DMAIC framework’. This Practice Note concentrates on Step 2—measuring the problem or inefficiency identified during Step 1, the ‘define’ phase. Every form of waste or inefficiency imposes a cost on the department. Some are direct, for example excess equipment, while others arise from lost time (opportunity cost) and the use of materials. The most frequent hurdle in Step 2 is deciding what to measure. The tools below will help you pinpoint which segment...

What are growth shares? Growth shares, sometimes called value shares or hurdle shares, are a distinct share class with limited rights. Those rights are structured so that staff only share in increases in the company’s worth arising after an acquisition. As a result, they broadly mirror the economics of an option where the exercise price is set at market value (or includes a premium). For a comparison of growth shares with share options, see Practice Note: Growth shares—practical examples and comparisons with options. Their restricted rights focus returns on value created after the acquisition, rather than on historic value at acquisition for the company specifically. Key elements of growth shares The employee acquires the growth shares up front—unlike a share option or a conditional share award, under which the individual receives shares at a later date only once specified conditions have been satisfied. The principal tax advantage of using this structure is that any increase in the company’s value after the employee has...

What are growth shares? Growth shares are ordinary shares that only participate in a company’s capital value once a defined value hurdle is met. That hurdle may equal the company’s market value at the subscription date, but more often is set at a premium to the initial equity value. After the hurdle is cleared, growth shares can participate on any chosen basis—frequently ranking pari passu with other ordinary shares on value created over the hurdle—and may include terms that affect their initial valuation, such as: catch-up provisions ratchets similar features Returns on growth shares can be capped if desired, although many companies avoid a cap to preserve management’s incentive. For further information, see Practice Note: Growth shares (value shares). Why issue growth shares? The primary aim is to drive participants to create future value while ring-fencing current value for existing shareholders. Growth shares suit senior management incentives in particular, and situations where companies expect a steep growth curve...

Date: [ insert date ] 1 Introduction The Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) aims to bolster the UK’s response to economic wrongdoing. It is designed to strengthen the UK’s fight against economic crime. A standout change for commercial organisations is the broadened basis on which companies can be criminally liable for misconduct by senior managers, extending corporate responsibility for their actions. 1.1 What’s the issue? Since 1971, the courts’ identification doctrine has set the test for treating a natural person’s actions and state of mind as those of a legal person. It has been the principal route for attributing criminal responsibility to corporate bodies. Under this approach, only when the ‘directing mind and will’ of a company committed the offence could liability attach to the corporate itself; in practice, this largely captured the managing director or owner when actively running the business. That standard has long been a demanding hurdle for prosecutors, which the government has now materially lowered via ECCTA 2023....

This term sheet outlines a plan to motivate key employees of [ insert name of company ] (the 'Company') by permitting them to subscribe to a distinct class of shares in the Company (the 'Growth Shares'). The points addressed in this document are presented for discussion only and each should be carefully considered before any implementation proceeds. 1 Overview Under this arrangement, participants will subscribe directly for Growth Shares. These shares confer rights designed so that employees benefit solely from post-acquisition increases in the Company’s value, and only on an IPO, a liquidation, or where more than [ Insert percentage ]% of the Company’s ordinary shares are sold (each, an 'Exit'). Upon an Exit, the Growth Shares entitle holders to a share of the Exit consideration, provided that the price paid to the Company’s shareholders exceeds a pre-determined hurdle (the 'Threshold Price')...

This Q&A proceeds on the basis that intended lowering of the hurdle attached to the growth shares is not one element of a pre‑arranged sequence of steps or a tax avoidance arrangement (for instance, where the plan from the outset was to grant the shares with a high hurdle and later reduce that hurdle to confer a benefit on employees). In that scenario, HMRC might effectively contend that the employment‑related securities rules are not engaged, and that employees are instead taxable to general earnings, by reference to the cases of PA Holdings Ltd v Revenue and Customs Commissioners and UBS AG v Revenue and Customs Commissioners...