UK: Weekly Tax Update - Monday 25 March 2013

Last Updated: 8 April 2013
Article by Smith & Williamson

1 GENERAL NEWS

1.1 Budget 2013

Our 2013 Budget commentary and a 2013/14 tax rate card are available to download from our website:

1.2 Levelling the tax playing field

HM Treasury published a Compliance progress report along with the Budget documentation. The Executive Summary is copied below:

"The vast majority of the UK's businesses and individuals are honest and pay their share towards funding public services. But a small minority seek deliberately to evade or to avoid paying what is due, while continuing to benefit from our public services.

In 2011-12 the UK's taxpayers collectively paid £474.2 billion in tax revenues. But our latest estimates suggest that around £32 billion of taxes are not collected. The difference between what is due and what is collected is called the 'tax gap', and in 2010-11 around £14 billion of this was lost to tax evasion, the hidden economy and criminal attacks. A further £5 billion was lost to tax avoidance and £4 billion to unpaid tax.

At the 2010 Spending Review, this Government reinvested £917 million in HMRC to tackle tax avoidance, evasion, criminal attack and debt and invested a further £77 million in the Autumn Statement 2012. We are spending this money on increasing the number of specialists working on compliance, improving their skills and investing in the data and technology that they use to identify and tackle tax avoidance and evasion. By the end of 2014-15, this investment will have contributed to delivering £22 billion a year in extra tax revenues. The next section highlights 16 of the most notable successes that HMRC has had over the past two years in securing these additional revenues.

Part 1 of this report sets out how the Government and HMRC are preventing, detecting and countering tax avoidance, in line with the anti-avoidance strategy published at Budget 2011. Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended. Over the past two years, there have been several significant developments – such as the decision to introduce the UK's first General Anti- Abuse Rule and a number of important court successes in avoidance cases. We bring the picture up to date by setting out the new anti-avoidance measures announced at Budget 2013 which will take the anti-avoidance strategy to a new level.

Part 2 sets out how HMRC is cracking down on tax evasion and summarises notable achievements since 2010. Evasion comes in many forms including individuals and businesses deliberately and illegally attempting to evade their tax obligations, by operating in the hidden economy, by not declaring their income, by committing tax fraud or by hiding their wealth.

Since 2010, HMRC has made more and better use of technology, data and analytics to identify those who evade their responsibilities. We have increased the number and skills of compliance officers and are using a much wider range of interventions to change the behaviour of evaders. We are also investing in new technology whilst working closely with more international partners to tackle organised crime networks both in the UK and overseas.

Part 3 highlights what HMRC is doing to deal with debt. We recognise that there are times when customers might experience temporary problems in paying their tax and allow them time to pay. But we have also deployed new techniques and technology to secure more of what is owed, especially where debtors refuse to engage. Part 3 also sets out the new measures for tackling debt that were announced at Budget 2013.

With its investments in HMRC and the new initiatives announced, this Government has restated its determination to level the tax playing field, supporting the vast majority of businesses and individuals who meet their tax obligations and ensuring that there is nowhere to hide for those who don't."

http://www.hmrc.gov.uk/budget2013/level-tax-playing-field.pdf

1.3 Jersey to agree package of tax measures with the UK

As announced in the 2013 Budget, a memorandum of understanding has been signed by HMRC with Jersey. Similar agreements have also been signed with Guernsey and Isle of Man.

The proposed package comprises:

  • an agreement to automatically exchange a wide range of financial information on UK taxpayers with accounts in Jersey which will significantly enhance HMRC's ability to crack down on those who do not declare their offshore affairs;
  • a disclosure facility to allow people to come forward to disclose their previous tax affairs in advance of the information being automatically exchanged.

The disclosure facility will be available from 6 April 2013 to 30 September 2016.

This measure is part of an international initiative to improve transparency and facilitate the exchange of information relating to taxpayers' financial affairs.

Link to memorandum: http://www.hmrc.gov.uk/budget2013/mou-jersey.pdf

2 PRIVATE CLIENT

2.1 Market value adjustments concerning disposals of assets held at 6 April 1965

Regulation 15(b) of the SI 1967/149 provides that a person shall not be treated as a person whose liability to capital gains is affected by the market value of an asset unless their liability has accrued under section 41 or 42 of the Finance Act 1965(a) (since 6 April 1965) and they are at that date or during any relevant year of assessment resident, ordinarily resident or carrying on a trade in the United Kingdom.

SI 2013/557 substitutes a new regulation 15(b) in SI 1967/149 to remove the requirement that a person must be resident, ordinarily resident or carry on a trade in the United Kingdom in order to be joined as a third party to an appeal or make an application to be joined. The references to sections 41 and 42 of the FA 1965 have been deleted and replaced by references to sections 13 and 87 of TCGA.

Regulation 15(b) includes a reference to section 86 of TCGA extending the right to be joined as a third party to an appeal or make an application to be joined to settlors of non-resident trusts.

The amendment is effective from 6 April 2013.

http://www.legislation.gov.uk/uksi/2013/557/pdfs/uksi_20130557_en.pdf

2.2 New childcare scheme

We are grateful to the ICAEW Tax Faculty for allowing us to copy the following article from their Newswire.

"The Government has announced a scheme to provide more help for the cost of childcare, worth up to £1,200 per child each year, to be phased in from autumn 2015. In the first year, all children under 5 will be eligible, but it will build up eventually to include all children under 12.

Interestingly, the scheme is to be available to families where both parents work, with each having earnings of less than £150,000, the current point at which the highest rate of tax, 45% from April 2013, becomes payable. This contrasts with the last year's change to child benefit, which is now lost in part by those with income over £50,000 and completely where income exceeds £60,000.

We presume that earnings means 'taxable income' and so would include all income such as from savings and letting income, but the detail will come later after a period of consultation. One further condition will be that the family does not already receive support through tax credits or Universal Credit (the replacement for tax credits, being brought in over the next two years).

It seems that the scheme will operate as an online system, so continuing the Government's move to being Digital by Default. Parents will open an online voucher account with a voucher provider and have the amounts they contribute topped up by Government. For every 80p contributed by parents, an additional 20p will be added by Government, being equivalent to the current basic rate of income tax. We are pleased to note that there is no mention of employers having to operate this scheme for participating employees. With the current burdens being placed on employers who will have to operate Real Time Information from April 2013, together with the plans for pension auto enrolment which will affect them soon, this will come as a great relief.

The proposal is that these voucher accounts will then be used to pay for any Ofsted regulated childcare in England, or the equivalent bodies in Scotland, Wales and Northern Ireland.

The current scheme of employer supported childcare (ESC) will continue for those already in the scheme, but no new members will be allowed to join. Existing participants will be able to choose whether they want to stay in or move to the new scheme. The outline of the new scheme as suggested so far, promises that for a family with two children, the new relief will be worth more than double the amount of a single claim for ESC and be available to 5 times as many families.

We don't yet know much of the detail, but this is definitely focussed on those who work, which we hope will include the self employed. There is to be consultation on how to support families within the new Universal Credit so that they will also be able to benefit to the same extent, but that won't come in until after April 2016."

3 IHT AND TRUSTS

3.1 Simplifying charges on trusts

HMRC has published the summary of responses to the consultation on simplifying charges on trusts.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ConsultationDocuments&propertyType=document&columns=1&id=HMCE_PROD1_032668

4 PAYE AND EMPLOYMENT MATTERS

4.1 Relaxation of RTI reporting requirements for small companies

HMRC has announced a relaxation in RTI reporting requirements (which apply for 2013/14 onwards) for small businesses.

Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th).

HMRC will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension's Universal Credit.

There is also a list setting out those circumstances where employers are excepted from the requirement to report on or before the date of payment to an employee.

http://www.hmrc.gov.uk/news/rti-small-businesses.htm

http://www.hmrc.gov.uk/payerti/on-or-before.pdf

4.2 New measures to block tax avoidance involving offshore employment intermediaries

The Government has announced that it will strengthen legislation to block tax avoidance involving offshore intermediaries, saying:

"These intermediaries are corporate forms put between UK workers and a UK business. They are based offshore, often in tax havens, and are used to avoid employment taxes. The problem is growing: HMRC now estimate that at least 100,000 workers are being employed through an offshore intermediary. In many cases the employee is unaware that their payroll is located offshore and tax is being avoided.

The Government will therefore give HMRC the powers it needs to collect full employment taxes for UK workers. Employment taxes will be payable for all employees in the UK, irrespective of where their payroll is located. Cracking down on this avoidance will benefit the Exchequer by almost £100 million a year. HMRC will consult after the Budget on the design and operation of these measures."

The Autumn Statement 2012 announced that HMRC would review the use of offshore employment intermediaries. An offshore intermediary is a structure that is put in place between a worker and a business using their labour. By having no presence, residence or place of business in the UK it is not currently obliged to remit payroll taxes or pay NICs. Some are in place for legitimate commercial reasons but it appears many are put in place with a view to avoiding tax, in particular employer NICs.

HMRC will issue a consultation document on the design and operation of the measure in May this year and legislation will be included in the 2014 Finance Bill. It is envisaged that the new measures will come into force on 1 April 2014.

5 BUSINESS TAX

5.1 Close company loans to participators

Subject to certain exceptions, the close company loan to participator rules operate to charge the company lender an amount as if it were corporation tax. The amount to be paid is equivalent to 25% of the amount of a loan or advance made to an individual, or a company receiving a loan or advance in a fiduciary or representative capacity (the borrowers here are termed 'relevant persons'), where either are participators or associates of such participators. Relief from the requirement to pay the amount equivalent to corporation tax (or the repayment of that amount) is available on a claim where the loan or advance is repaid or the debt is released or written off.

The provisions could also apply where an intermediary person (in contrast to the definition for relevant persons, 'person' here can include a body of persons whether corporate or unincorporated) other than the original close company, makes a payment or transfer to an individual or company participator otherwise caught by a direct loan or advance from the close company.

A close company is one that is controlled by five or fewer participators (and their associates), or by participators who are directors (subject to some exceptions).

It was possible to avoid the effect of these rules or there were inconsistencies in the way the rules operated due to the following:

  • A loan or advance could be made to an intermediary such as a partnership containing both individuals and non-individuals (for example the individual participator and a company). The partnership was then not considered a 'relevant person' for the purpose of the close company loan to participator rules, and the partnership itself would not be considered an associate of the participator.
  • A participator and the close company of which they are a participator may be members of a partnership where profits are allocated according to the partnership agreement principally to the corporate member. Those profits may be left undrawn, or contributed as capital to the partnership. If the partnership then made a loan or advance to the participator it was contended this was not caught by the loans to participator rules, as the close company had not itself made the loan.
  • Although not listed in HMRC's technical note on the subject, and without seeing the legislation, the following planning may also be a target: a company could give an individual 'partly paid' shares, together with cash which was subject to a requirement that it will be used to pay up the uncalled capital on the shares when the remaining capital is called. It was alleged that such an arrangement was not a loan or advance to the individual and therefore was not caught by the loans to participator rules.
  • The close company might make a loan to an individual participator. The loan could be repaid before the 25% amount equivalent to corporation tax needed to be paid, or indeed the loan could be repaid at a later date. Shortly after the loan repayment the loan could then be re-issued to the individual as a new loan. This could result in a complete avoidance of the requirement to pay the 25% amount equivalent to corporation tax, or if it had been paid, the repayment of that amount.

Measures effective 20 March 2013

Three changes to the close company loan to participator rules are proposed to deal with the above, which are effective from 20 March 2013:

  • The rules will apply where the loan is made to any form of partnership in which a participator (or their associate) who is a 'relevant person', is a partner. To provide clarity the legislation will also specifically include loans to trustees of a settlement where one or more of the trustees or actual or potential beneficiaries is a relevant person (or their associate) who is a participator.
  • The rules will apply to arrangements where value is extracted from a close company and a benefit is conferred (directly or indirectly) on an individual (or their associate) who is a participator in the close company.
  • There will be a 30 day rule to deny relief for loans repaid where the amounts repaid and redrawn exceed £5,000. Even where the 30 day rule does not apply, if the amounts outstanding are £15,000 or more at the time of repayment, and there is an intention to redraw an amount from the close company, the relief arising from the repayment will be denied.

Loans to a partnership from a corporate partner or a company that is owned by the partnership, that are used to finance drawings in excess of partnership profit allocations have always been a concern as far as the loan to participator rules are concerned. It is not thought that these changes would affect commercial loans from close companies to partnerships, but the facts and circumstances of each case will need to be considered in the light of the changes.

Further consultation on structure and operation of tax charge on loans to participators

On 20 March the Government announced it would consult later in 2013 on the structure and operation of the tax charge on loans from close companies to their participators. If legislation is found to be needed it will be included in Finance Bill 2014.

http://www.hmrc.gov.uk/budget2013/evade-avoid.htm#5

http://www.hmrc.gov.uk/budget2013/close-company-loans-loophole.pdf

5.2 Corporation tax measures effective 20 March 2013

Draft legislation was issued on 20 March, together with technical notes, to cover two areas of corporation tax anti-avoidance. A technical note describes changes to other areas of corporation tax loss relief.

Corporation tax deduction in connection with share option awards

Legislation will be introduced in Finance Bill 2013 to clarify the rules that determine the availability of corporation tax deductions in connection with share options or awards granted to employees. This legislation will have effect from 20 March 2013 in relation to company accounting periods ending on or after that date.

http://www.hmrc.gov.uk/budget2013/ct-relief-employee-shares.pdf

Corporation tax loss relief - shell companies and apportionment of CFC profits

Legislation will also be introduced to address arrangements which seek to circumvent the longstanding loss buying rules in Part 14 of CTA 2010. In particular the rules will cover reliefs, deductions, allowances and expenses for which it is possible to dictate or predict in advance the timing of their 'crystallisation' since, where timing can be dictated or predicted, ownership or part ownership changes can take place in advance of the crystallisation of the loss enabling the current anti-'loss buying' rules in Part 14 of CTA 2010 to be by-passed.

The Government therefore proposes, in certain circumstances involving in a transfer between unconnected parties, to bring the tax treatment of an unrealised loss, more closely into line with the longstanding treatment of realised losses. The proposed changes will introduce three separate rules to combat 'loss buying' which, when triggered, will not remove the ability to relieve relevant losses but merely stop their set-off against other profits (including by way of group relief).

  • A particular pressure point arises where it is possible to dictate or predict the amount and timing of reliefs, allowances and deductions. Where these are sizeable, they can encourage tax motivated reorganisations through which unconnected entities may get access to what are, in effect, unrealised losses.
  • The targeted arrangements may take the form of selling all or some of the shares in a company or the assets of a company, where either there are allowances that could have been claimed but weren't by the previous owner or where it is known that a debit will be created in a future accounting period. Arrangements can, however, be more complex and contrived and may also involve moving profits into a company to use up relevant deductions.
  • The first of the three rules targeting the arrangements expands the application of Chapter 16A of Part 2 of the Capital Allowances Act 2001 (CAA 2001). The other two rules are targeted anti-avoidance rules (TAARs) to be included in a new Part in CTA 2010. One will counter tax motivated reorganisations between unconnected parties involving other forms of relevant deductions. The other will counter arrangements that aim to transfer profits to companies so that the relevant deductions can be used.

These changes have effect from 20 March 2013 and the draft legislation will be released for consultation on 28 March.

http://www.hmrc.gov.uk/budget2013/ct-loss-buying-rules-tech-note.pdf

Corporation tax loss relief - change of ownership and change in the nature or conduct of trade

Legislation will be introduced in Finance Bill 2013 to prevent 'loss buying', where companies pass the potential to gain access to corporation tax relief to unconnected third parties. The legislation will:

  • extend the current 'loss buying' rules, in Part 14 of Corporation Tax Act 2010 (CTA 2010), to apply to a transfer of ownership of company that is not a trading company nor one with a property or investment business, which holds non trading loan relationship deficits and non trading intangible fixed asset debits and credits;
  • amend the rules in Part 14 of CTA 2010 to additionally apply to the trade of a company that has undergone a change of ownership, if that trade or part trade is subsequently transferred to a fellow group company; and,
  • amend the rules at Part 5 of CTA 2010 to include controlled foreign company apportionments in the calculation of certain amounts to be surrendered as group relief.

These measures will also have effect from 20 March 2013 (the link below contains a note with the draft legislation).

http://www.hmrc.gov.uk/budget2013/ct-loss-loophole-closure-rules.pdf

5.3 Corporation tax identification and matching rules in relation to capital losses

The Upper Tribunal has considered an appeal by Land Securities plc against the decision of the First-tier Tribunal denying a purported £200m capital loss generated (so Land Securities plc contended) by the operation of TCGA s106 specifying the matching rules for corporation tax where shares were disposed of and acquired within a six month period.

The FTT had dismissed the appeal of Land Securities on a ground of statutory construction which was not argued by either of the parties at the hearing, but which was advanced by the FTT itself. In reaching its decision, therefore, the FTT rejected not only the case argued by Land Securities, but also the case argued by HMRC (which included a Ramsay argument).

In the proceedings bringing the appeal before the Upper Tribunal, HMRC sought to argue the case they had put to the FTT as well as to argue in support of the ground on which the FTT had based its decision.

The Upper Tribunal agreed with the reasoning of the FTT concerning its conclusions on the interpretation of the statutory relevant legislation. It did not hear oral submissions on HMRC's contention that section 106 should not apply to these transactions, realistically analysed. It therefore came to no conclusion on the Ramsay issue. Land Securities' appeal to the Upper Tribunal was accordingly rejected.

http://www.tribunals.gov.uk/financeandtax/Documents/decisions/land-securities-plc-v-hmrc.pdf

5.4 Distinction between capital and revenue expenditure

The First-tier Tribunal case of Cairnsmill Caravan Park considered whether £89,210 spent on resurfacing part of the area occupied by the Caravan Park (an area covered with grass was resurfaced with hard-core materials) was deductible as a trading expense for the year to 5 April 2009. HMRC argued that it represented an improvement and as such was capital and not deductible. The decision went in favour of the taxpayers, with the concluding comments being:

"[HMRC]...suggested that the hard-core surface is more durable than grass and consequently and quite simply is thus an improvement. That inference may have a superficial attraction. However, as the evidence emerged, other considerations arose. Durability seems questionable as the original grass surface had been in existence for about 50 years (para 10 of Mr Kirkcaldy's Witness Statement – and not challenged in cross-examination). Maintenance costs of the new hard-core surface are, if anything, marginally higher. The hard-core has less aesthetic appeal: it is like any hard-surfaced car park. It is not suitable as a recreational area for children. Securing a typical camping awning on a hard surface is problematical inasmuch as fixing pins cannot easily be located. This, in fact, has generated customer complaints.

We do not consider that that part of the Park ie the area allocated to touring caravans, has been enhanced or improved as a result. Also in the broader context of the Park as an entirety we do not consider that it gives rise to an improvement. In the valuations produced before and after the works were undertaken, there is no suggestion of an improvement or resulting enhanced value.

The most obvious advantage to the Appellants of re-surfacing in this manner was that it avoided a serious disruption of their lettings for touring caravans over an extended period. A "like for like" re-surfacing with grass would not have stabilised and been suitable for use for up to two years. An immediate contributing incentive was the availability of suitable materials (the surface of a runway at nearby Leuchars Air-base) as a hard-core foundation, at an attractive price, and with minimal carriage costs.

For all of these reasons we consider that the expenditure of £89,210 on re-surfacing with hard-core is a revenue expense, deductible for tax purposes."

http://www.bailii.org/uk/cases/UKFTT/TC/2013/TC02580.html

5.5 Cash basis

The Overview of Tax Legislation and Rates issued on Budget Day included the following note:

Simpler income tax

As announced in Budget 2012, legislation will be introduced in Finance Bill 2013 to allow two simpler income tax schemes for small unincorporated businesses. Following consultation, the legislation has been revised to:

  • keep the cash basis optional but limit the circumstances under which a business can leave it; and,
  • provide for an adjustment on a 'just and reasonable' basis where an individual takes business goods for own use and not require businesses to align reporting with the tax year.

These changes will have effect from the 2013-14 tax year.

6 VAT

6.1 Reduced rates of Irish VAT

Irish VAT provides for reduced rates of VAT (from the standard 21% rate) as follows:

Supplies of goods and services of artificial insemination services and the sale of livestock semen – 13.5%.

The supply of livestock and live greyhounds as well as to the hire of horses – 4.8%.

The CJEU has concluded that these reduced rates are not in accordance with the VAT Directive (2006/112 articles 96 and 98 read in accordance with Annex III, and 110).

http://curia.europa.eu/juris/document/document.jsf?text=&docid=135029&pageIndex=0&doclang=en&mode=lst&dir=&occ=first∂=1&cid=406406

6.2 Notification of vehicle arrivals – effective 15 April 2013

When a new or used vehicle is brought into the UK for permanent use on UK roads, any VAT due must be paid or accounted for to HMRC. The vehicle must then be registered (and licensed) through the Driver and Vehicle Licensing Agency (DVLA), or the Driver and Vehicle Agency (DVA) in Northern Ireland.

From 15 April 2013 a new system, called Notification of Vehicle Arrivals (NOVA), is being introduced to improve the process for notifying HMRC and paying the VAT due.

Simon Sutcliffe of Smith & Williamson comments:

Briefly NOVA is:

  1. An imitative to combat VAT fraud by replacing the current paper system with an online system linked between HMRC and the DVLA.
  2. The system will be used to notify all vehicle arrivals in the UK from the EU or a third country.
  3. The DVLA will only register vehicles that appear on the NOVA system and all arrivals must be entered on the system within 14 days otherwise penalties will be levied.
  4. There are exemptions, as you would expect, such as temporary admissions and personal imports, to name but two.
  5. The system will update CHIEF and automatically calculate the VAT due (and late notification penalties).
  6. It allows multiple submissions and notifications for commercial importers.

HMRC have failed to take account of vehicles such as hydrogen powered vehicles, ATVs and very high-value classic cars on their system and these may still have to be done manually by the Car Import Team. The system is far from perfect and will throw up a number of issues for those regularly importing vehicles.

http://www.hmrc.gov.uk/nova/index.htm

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.