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Reasons to be Cheerful – Another Quarter of Above Average Performance from the James & George Collie Model Portfolios!

Tuesday, January 30th, 2018

5Q3 2017 Update
By Scott A. Middleton APFS BA (Hons)
Chartered Financial Planner


Once again, we have had another quarter of continued positive returns for equity investors with both UK and Global Equities moving strongly ahead. In contrast, Fixed interest investors have seen little return from corporate bonds and there was actually a small fall in the value of UK Gilts. However, the High Yield Bond sector did fare better.

Within the various equity sectors the most notable performances came from Japan, returning 7.19%, Asia Pacific Ex Japan returning 4.08% and Global Emerging Markets returning 3.90%.

This quarter marked a continuation of positive returns for most investors. After an extended period of positive returns, the question of profit taking versus continuing to expect further growth is in the minds of many investors, and we are setting out our current strategy within the context of this question throughout this update.

Investment cycles vary considerably in length from a matter of weeks to multi-decade cycles. The longest cycles can extend for more than 30 years and when these cycles change they can provide the highest level of risk and opportunity to investors.

When regulation was first brought into financial services in 1985 the most prominent warning introduced was to ensure investors were told that past performance was not a guide to future returns. Yet, more than 30 years later, the performance of an investment often remains the most significant determining factor in terms of selection.

The reason, in our opinion, is explained by the study of behavioural finance as people use their recent experience as the main basis for future expectations and current decision making. The longer the cycle, the higher the conviction, to the point where long cycles can make expectations so strong, that historical wisdom derived from experience becomes accepted as hard fact. The quote ‘It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so’ captures the essence of this point and appears at the beginning of the film ‘The Big Short’.

It is our view that another long term cycle has ended, but that investors are likely to continue to have expectations based on the old cycle for some time, leading to lower returns than might be available from a fresh review and interpretation of the current position. As a consequence we are reducing the value of recent past performance in our considerations, looking at much longer historical periods and closely considering the current position and prospects based on factual information rather than inherited bias.

The current bull (rising) market in equities has lasted 8.6 years to date, the previous bull markets since 1926, starting most recently, lasted 5.1 years, 12.8 years, 12.9 years, 2.5 years, 6.4 years, 13.9 years, 15.1 years and 3.7 years. The bear (falling) markets have lasted from 3 months to 2.8 years with the most recent two lasting 1.3 years and 2.1 years. This data suggests that the length of bull markets varies significantly and the current bull market is well within the range. Whilst the most recent bear markets have been towards the shorter end of the range the bull markets have been towards the longer end. Some investors are nervous that the current bull market has lasted longer than the previous cycle, but history suggests that this is not a relevant factor in determining when and if to take profits.

There is, however, a clear indication of danger within fixed interest markets at present, which we believe is being ignored in the same way as the warning signs mentioned previously in relation to the recent banking crisis.

The basic principle of investment is to invest money which is not required so as to provide greater spending power in the future. In order to be successful, the returns created must exceed inflation otherwise the spending power will be lower in the future. The current position is that fixed interest returns, particularly in gilts, are not likely to meet this basic fundamental requirement.

The problem is that fixed interest investments have enjoyed a favourable 30 year plus cycle and investors continue to have expectations based on the recent cycle. In addition, the investment community lacks professionals with experience of cycles where fixed interest returns have been disappointing. In fact, the recent cycle experience has been re-enforced with definitions of risk, which define fixed interest investments as low risk, as they generally only consider 20 years of data and disregard the fundamental lack of value which now exists.

To illustrate this, if a typical return from a fixed interest asset is 1.3%, but target inflation is 2% and inflation expectations are above 3%, risk appears high and the consideration of the historical strong returns, which caused the current position is an unhelpful distraction in determining asset allocation today. We are aware of this and will therefore continue to monitor these markets very closely.

In terms of equity markets the position appears more favourable than many commentators are reporting. Whilst valuations do appear quite high, historically there are a number of reasons to be optimistic that current levels are well supported and markets can continue to provide positive returns.

History shows that equities often outperform during periods of moderate inflation as companies are often able to raise prices providing some inflation protection for shareholders. The amount of quantitative easing injected into the global economy now exceeds $15trn and continues to rise at present. This cash is gradually filtering into the real economy and is driving global economic growth, reducing unemployment, increasing future confidence and beginning to increase inflation. The effects of quantitative easing are likely to continue for a decade or more given the gigantic size of the programme.

The US has raised interest rates 3 times, beginning at the end of 2015 and the Bank of England recently increased interest rates from 0.25% to 0.5% in the UK, which was the first rate increase for a decade. Clearly central banks are starting to worry about inflation, however both the Federal Reserve and the Bank of England have made it clear that the pace of increases will be very slow, as they are more worried about damaging economic growth than controlling inflation. While we expect further rate increases this year for both economies, we expect that the level will be modest and not enough to meet the long term inflation target which will be exceeded. Simply put, the $15trn inflationary stimulus applied through quantitative easing resembles a flame thrower, whilst the interest rate increases that are deployed to control the resulting inflation looks like a water pistol.

Whilst downside risk is important there is also the possibility of upside risk where markets move to a higher level and never re-visit lower thresholds. These periods of growth have occurred during periods of significant technological advancement, which many feel we are currently experiencing. If this is occurring it would also be likely to extend the current rise in equity prices.

In summary, fixed interest markets remain overvalued in our view and the risks in these markets are not being measured accurately by many investors. Equities have enjoyed strong returns which could continue in the short, medium and even longer term and are presently supported by synchronised global economic growth, high corporate confidence and central banks’ reluctance to raise interest rates aggressively. The key potential risks for equities are low wage inflation and high interest rates if central banks do target inflation effectively, which would reduce both bonds and equity markets and these risks are being closely monitored.


There is no change to the strategy at this time and the portfolios remain overweight to equities whilst bond exposure is generally focussed within shorter dated bonds, which are less vulnerable to capital losses if interest rates increase.

If we believe the risks to equities increase in the future we will consider profit taking, but at this time we believe that the upside potential is attractive, especially given the low returns available from cash.

The equity funds held are generally value rather than growth in style. There have been strong returns from some growth strategies, however the underlying business models often require on-going cash investment. Therefore growth valuations are vulnerable to the tighter conditions, we expect within fixed interest markets going forward.

This article is not intended to, and does not, provide investment advice. You should always seek professional advice.

For more information on the James & George Collie Model portfolios or how you could invest in them please feel free to contact Scott Middleton on 01224 581581 or via email at

Finally – A Happy New Year from all at James & George Collie Financial Management!!

Residential Property Sales – 2017 Review

Monday, January 29th, 2018

detached-house2017 was another challenging year in the Aberdeen Property market, however not to the extent of the previous year. In 2016, average prices fell by 10%; in 2017 the fall was 3½%. This reflects the general feeling that we are either at, or very close to, the bottom of the current downturn, with prices not expected to fall very much further from their current levels.

Since the beginning of the year detached properties in Aberdeen have been selling on average at 5% under the Home Report valuation figure, taking on average 5½ months on the market to achieve a sale. Non detached houses are also selling at 5% under valuation, but they are achieving a deal, on average, after 4 months on the market. Flats are suffering to some extent from the volume of properties on the market for sale. They are selling on average after 5 months on the market at a price 10% below Home Report valuation.

There are some reasons for mild optimism. The average house price in Aberdeen is still higher than it was 5 years ago and sale volumes certainly increased in 2017, up 3% on the number of sales in 2016. If this continues in the first quarter of 2018, combined with an increase in oil industry activity, then confidence in the market should return leading to a slow but steady improvement.

James & George Collie’s dedicated sales office at 450 Union Street, Aberdeen, located between Rose Street and Chapel Street, in the heart of the city centre, enjoys a prominent position on Aberdeen’s main street and provides ideal exposure for properties on the market for sale. Located directly opposite the new Capitol and Silver Fin office developments, it is ideally placed to advertise properties for sale in anticipation of the property market bouncing back.

For further information or advice please contact our property sales office on 01224 572777 or our estate agency partner Brian Sutton on 01224 563340 or by email at

Pensions in the context of separation and divorce

Monday, January 29th, 2018

pensionLast year, the Supreme Court (the highest Court of Appeal in the UK) made a landmark decision in the case of McDonald v McDonald relating to the question of pensions on divorce. Pensions can form substantial assets for these purposes. A question arose as to how much of Mr McDonald’s pension should be taken into account when calculating the assets to be divided on divorce.
The law sets out the formula to calculate the proportion of any pensions which should be taken into account. The regulations (regulation 4 of the Divorce etc (Pensions) (Scotland) Regulations 2000) provide the relevant formula. The formula is A x B ÷ C. A is the value of the pension at the relevant date (normally the date of separation), C is the length of time the individual was in the pension scheme before the relevant date and B is the amount of time C which falls within the marriage itself before the relevant date.
The difficulty in the above case arose with regard to the definition of the period of membership. It had previously been thought that would relate only to being an active (generally speaking a contributing) member rather than the whole period of membership whether contributing, not contributing or receiving the pension.
Mr McDonald joined his British Coal pension scheme in December 1978. He married his wife in March 1985. He took early retirement on the ground of ill-health and started receiving his pension in August 1985, a few months after marriage. In 2010 when the parties separated Mr McDonald argued the value of his pension rights should be restricted to the period during which he was an active member of the scheme, and this would amount to £10,002. Mrs McDonald argued the whole period of her husband’s membership of the scheme, both contributing and receiving, should be taken into account, which meant the value to be included would be £138,534.
The Supreme Court agreed with Mrs McDonald, deciding the period of membership should not be restricted to active membership but should include the entire period of membership.
This is not however the end of the road for anyone attempting to exclude the portion of their pension which does not relate to the time that they were contributing during their marriage. The Family Law (Scotland) Act 1985 allows for some flexibility under Section 10(1). This provides there may be special circumstances which allow that scenario to be taken into account and it remains possible to attempt to persuade the Court that a certain portion of a pension be excluded.
However, this case does bring about a significant change in the way pensions on divorce will be dealt with. This is a complicated area and legal advice should be obtained.
If you wish to discuss any matter raised in this article, please contact Senior Court Solicitor, Susan Waters, by telephone on 01224 581581 or by email at

Building Warrants – An Art and a Necessity

Monday, January 29th, 2018

constructionAberdeen City Archives recently held an exhibition called “The Art of the Building Warrant”. The exhibits were original building warrant plans of iconic Aberdeen buildings past and present such as the Northern Hotel with its Art Deco frontage, the police office at Lodgewalk, the Pittodrie Pavilion and the Tivoli Theatre. Looking in particular at the symmetrical lines of the plans of the Tivoli theatre it is obvious that drawing a building warrant plan can be a work of art.

No matter where you are reading this, the chances are that you will be sitting in a building which at some point has been the subject of a building warrant. The submission of plans to the Local Authority for approval and the grant of a building warrant for those plans has been part of our lives for many years. Modern building warrant legislation dates back to the Building (Scotland) Act 1959, but building warrants themselves have been in existence for some years before that. The building warrant plans for the Tivoli Theatre date back to 1872. However, in over 35 years experience of property transactions, I can say that nothing gives more trouble than a building warrant, or more accurately, the lack of one. If alterations which require a building warrant are carried out without one, this can cause untold problems and delay in a house sale even leading to the sale being called off. Also, mortgage lenders may not be prepared to lend on a property which has unauthorised alterations and that may radically affect its value. Anyone carrying out unauthorised alterations to their property should realise that he or she might directly be affecting the value and marketability of the property.

If the alterations were carried out before 1 May 2005 without a building warrant, there is a procedure whereby a “Letter of Comfort” can be obtained from the Local Authority. This is a letter confirming that the Local Authority will not take any action against the owner. Unauthorised alterations taking place after that date will require a retrospective building warrant which can be a time consuming and costly procedure. Fees for retrospective applications are substantially higher than for normal applications.

The message is clear. Check with the Local Authority or a qualified architect or building consultant whether or not a building warrant is required before carrying out any alterations. Many minor alterations do not require a building warrant but you cannot assume that and it is better to be safe than sorry. The building regulations are complex and constantly changing. Alterations which may not have required building warrant in the past may need one now. Don’t put yourself in the position of having to obtain retrospective building warrant for alterations in a hurry when you are selling or remortgaging your property.

Should you wish any further guidance on the requirement for building warrants, or indeed any other conveyancing related matter, please contact the author, Forbes McLennan, by telephone on 01224 581581 or by email at


Monday, January 29th, 2018

barristerOne common misconception that is often held by clients who consult a Family Lawyer for the first time, is in relation to what is possibly the couples most valuable asset, namely the family home.

A decision by Lady Carmichael in the Outer House of the Court of Session in the case of JA against WA has reinforced this point. This case revolves around a couple who were divorcing. The husband contended that the matrimonial assets ought not to be shared equally because the net value of the matrimonial assets derived substantially from his gifted, inherited or pre marriage property. He sought an order that the matrimonial home and two other heritable properties owned should be sold and the proceeds be divided in the proportion of two thirds to him and one third to his wife. The wife agreed that the matrimonial home should be sold but sought an equal sharing of the net proceeds. She also sought a transfer to her of her husband’s interest in each of the other two heritable properties, again with other orders.

By way of background, the husband’s father died when he was a child and he had inherited money. He brought investments to the marriage in the amount of approximately £100,000. He also owned a flat in Edinburgh. During the marriage he inherited a further £10,000 from his father’s estate and received a sum in excess of £200,000 from the estate of an aunt, and approximately £25,000 from his godfather. His mother also gifted him over £230,000, again during the marriage. On his mother’s death he received £140,000 by way of the proceeds of a Life Assurance Policy, the residue of his mother’s estate in the sum of approximately £23,000, a shared investment portfolio and a property in Bamburgh. Before their marriage the wife had owned a property in Edinburgh which she still retained. Since the date of the parties separation the husband had received further sums by way of inheritances totalling almost £580,000. During the marriage the husband had received redundancy and resettlement payments from the Army, part of which was attributable to his pre marriage service.

The Judge focused, in particular, on the matrimonial home which was bought during the marriage for £757,070, funded partly by a mortgage of approximately £300,000. In addition, the husband transferred £161,000 from his current account to settle the deposit. The proceeds of sale of a flat in Edinburgh of approximately £253,000 was also applied to the purchase and the husband’s mother contributed £75,000. The parties took title in equal shares. The wife contended that the £161,000 contributed did not come from her husband’s inherited wealth but from contributions he had made during the preceding years of marriage.

The Judge also looked at the background relating to the various other properties and reflected on the law. She then looked at the law regarding the unequal sharing of matrimonial assets. It is a trite principal that the whole of an asset may be excluded from sharing on the basis of the source of the funds used to acquire it, but at the end of the day the task of the Court is to achieve fairness between the parties.

In this case, the Judge noted there were discreet and substantial capital payments from the pre-matrimonial property of the husband and it was entirely practical to ascertain where the funds for the purchase of the matrimonial home came from. She therefore stated that it was clear that the greater proportion of the matrimonial home was acquired using the husband’s funds which derived from his own, non-matrimonial property, or were gifted to or inherited by him. Having said that she was not satisfied that the various orders sought by the husband, including the sale and subsequent unequal sharing of the value of the three heritable properties represented a fair sharing of the matrimonial property, she did conclude that the matrimonial property should be shared unequally. She therefore decided that the three items of heritable property should be sold and the net proceeds divided in proportion of one third to the wife and two thirds to the husband. The Judge also made orders regarding the husband’s pension and various other assets (which orders were opposed by the husband) to ensure a fair division was achieved at the end of the day.

In summary, this case simply reminds us of the need, where any couple are buying a property but are contributing unequally towards the purchase price or where the purchase of a property is funded by gifts or an inheritance received by one party, for these facts be recorded in an Agreement entered into between the parties to save the expensive, stressful and time-consuming Court cases which may result. Such agreements are not limited to events occurring before marriage or where a couple co-habit but can be entered into post marriage if for example one of the parties receives a substantial gift or an inheritance which is then used to acquire something either in that parties sole name or in the joint names of the parties and which may be deemed to be a matrimonial asset thereafter.

For further advice on this or other similar matters, please do not hesitate to contact Graham A. Garden on 01569 763555 or by email at or any of our other Court Solicitors.

James & George Collie Managed Portfolios – Review of Q2 2017

Wednesday, September 20th, 2017

by Scott Middleton, Chartered Financial Planner, James & George Collie Financial Management Limited

Executive Summary

  • The James & George Collie Model Portfolios again posted a positive return during Q2, extending the gains made in the first quarter of 2017
  • Equity markets continued their upward trend in the second quarter of 2017, with an improving global economic outlook, reduced political uncertainty and positive corporate earnings revisions providing support across regions
  • For sterling-based investors European, Asian (ex Japan) and Emerging Markets equities have been the standout performers year-to-date, with UK, North American and Japanese markets also enjoying positive returns in the first half of 2017
  • In contrast, conventional gilts sold off in June, reversing the gains seen in the first quarter as Bank of England policymakers debated whether to raise interest rates.

Review of Q2 2017

5While the general election itself did not have a massive impact on bond yields, one of the most important points to note during the second quarter of 2017 was that conventional gilts posted negative returns, as the perceived change in attitude of central banks towards normalising monetary policy caused a sharp spike in yields. The ensuing speculation about austerity policies being watered down, as well as a potentially softer Brexit, also did not help gilts, leading to a total return of -1.3% from the FTSE Actuaries UK Conventional Gilts All Stocks index over the period.

As highlighted last quarter, the James & George Collie Model Portfolios remain underweight fixed interest from an asset allocation perspective, a function of our relatively cautious stance on bonds in general given the historically low level of yields on offer. This positioning once again added to relative returns, though the majority of the outperformance seen over the quarter was generated at the underlying fund selection level.

Turning to equity markets, and the FTSE All-Share posted a total return of 1.4% over the quarter, with mid- and smaller-cap companies again outperforming their larger counterparts. Year-to-date total returns for the FTSE Small Cap (ex IT) and FTSE 250 (ex IT) now stand at 8.8% and 8.4% respectively, comfortably ahead of the 4.7% return from the FTSE 100 index. The period also saw a continuation of “growth” stocks outperforming “value”, with sectors such as Oil & Gas, Basic Materials and Utilities posting negative returns over the period.

The James & George Collie Model Portfolios active UK equity holdings outperformed over the quarter, with a number of managers extending their relative gains year-to-date. The Artemis Income, Investec UK Alpha and CF Woodford Equity Income funds were three such examples, all benefiting from strong performance at the individual stock selection level as well as their underweight exposure to those poorly performing sectors mentioned above. The James & George Collie Model Portfolios allocation to the smaller end of the market also delivered firmly positive returns, with the River & Mercantile UK Equity Smaller Companies fund enjoying continued strong performance from long-standing holdings across the AIM market.

Turning to international equity markets, Europe was the standout performer during the second quarter, with the FTSE Europe ex UK index returning 4.6% against an improving political, economic and corporate backdrop. In France, the election of Emmanuel Macron was received positively by markets, with significant asset flows into the region arising from the successful navigation of this perceived political hurdle. Pleasingly, the James & George Collie Model Portfolios European equity exposure outperformed at the fund selection level, while the overweight allocation to the region also contributed to relative returns. We further increased the exposure across several of the strategies towards the end of the quarter, while also making a change to our holdings. Further details can be found in the next section.

North American equities ended down in sterling terms over the quarter, a function of the dollar weakness seen during the period. The James & George Collie Model Portfolios exposure also finished in negative territory, underperforming the broader market as the Old Mutual North American Equity and Schroder US Mid Cap holdings lagged modestly.

Elsewhere, returns from the James & George Collie Model Portfolios Asian allocations were positive, with the BGF Asian Growth Leaders – a new holding introduced in March – also benefiting from its exposure to technology names. In Japan, the Baillie Gifford Japanese Income Growth fund continued its strong start to the year with another quarter of outperformance.

Finally, the James & George Collie Model Portfolios Absolute Return exposure delivered a marginally positive return over the quarter, with the Invesco Perpetual Global Targeted Returns and – within the lower-risk strategies – Newton Real Return funds the standout performers. Returns from the James & George Collie Model Portfolios Commercial Property exposure were positive on both an absolute and relative basis, with the F&C Property Growth & Income fund enjoying a particularly strong quarter to bring its year-to-date return to 7%.

Q2 2017 Changes to Portfolios

To summarise, the key changes made to the James & George Collie Model Portfolios asset allocations over the quarter were as follows:

  • The James & George Collie Model Portfolios exposure to European equities was increased, a move that reflects our continued positive outlook for this market on the basis of an improving economic environment, diminishing levels of political risk and positive corporate fundamentals.
  • The James & George Collie Model Portfolios exposure to Japanese equities was again selectively increased, with the allocation maintained as one of our key overweight exposures at the regional level.
  • We have closed our modestly underweight allocation to UK equities across the portfolios, a move that reflects more our constructive outlook for risk assets than a wholesale change in our view on the domestic economy.
  • We have increased the exposure to Absolute Return funds within the James & George Collie Moderately Adventurous and James & George Collie Defensive portfolios, having already raised this allocation within the James & George Collie Balanced and James & George Collie Cautious portfolios earlier in the year.
  • The James & George Collie Model Portfolios cash levels were selectively reduced in the process.

At the fund selection level, we have introduced a new active fund within the James & George Collie Model Portfolios European equity allocation, while also moving the James & George Collie Model Portfolios active Emerging Markets equity holdings to an equal-weighted basis.

Starting with Europe, we have exited the James & George Collie Model Portfolios exposure to the BlackRock Continental European Income fund in favour of the Henderson European Selected Opportunities fund. This move concludes the work undertaken to increase the economic sensitivity of the James & George Collie Model Portfolios exposure to the region, and was decided upon in the wake of the first round of the French election, when our positive outlook for European equities was reaffirmed.

The addition of the Henderson fund to the strategies removes some of the more defensive biases that we had identified as a potential source of concern in a pro-cyclical market environment. John Bennett, the manager of the fund, is pragmatic in nature and his current positioning of the portfolio reflects our own broadly positive outlook for the region. Indeed, the fund’s investment process provides the flexibility to rotate into sectors that are typically under-represented within the BlackRock fund, and Bennett’s recent activity has certainly increased the “value” characteristics of the portfolio in recent times, with a move away from Healthcare in favour of an increased allocation to Banks the most notable example. The rationale for this rotation was based partially upon the valuation premium of certain sectors appearing high relative to history, but also the team’s view that selected European Banks are finally investable, both in terms of their financial strength (with their dividend yield well covered) and lowly valuations.

Paired alongside the incumbent allocation to the JOHCM Continental European fund, the result of this change is an exposure to two ‘core’ active managers that better reflect our outlook for European markets. Both remain broadly positive in their outlook and positioning, as well as relatively large cap in nature, and ensure synchronicity with our overweight allocation to this region.

The final change of note was the repositioning of the James & George Collie Model Portfolios active Emerging Markets equity holdings to an equal-weighted basis, having previously been tilted in favour of the more “value”-orientated Lazard Emerging Markets fund. The resulting position ensures a more balanced exposure to the low beta, high quality bias of the Henderson Emerging Markets Opportunities fund alongside the positive tilt towards global reflation obtained from the Lazard holding.

At the headline level, there is little quarter-on-quarter difference to our positioning across the James & George Collie Model Portfolios. Rather, it is the emphasis of these tactical allocations that we have changed. As such, we remain biased towards equities, with North America, Europe (ex UK) and Japan our key ‘overweight’ positions relative to strategic benchmarks. This is in contrast to the UK, where we maintain a ‘neutral’ allocation.

Within the James & George Collie Model Portfolios bond exposure, we retain a cautious stance overall. Although gilt yields did rise modestly during the last quarter, they still remain close to historical lows and do not appear to offer much value, especially when elevated levels of inflation are taken into account. Unfortunately, most other parts of the bond market also look expensive following a prolonged period of strong returns. We are therefore focusing on quality and liquidity, while also seeking to earn a competitive return. We remain of the opinion that yields will be slow to rise, and expect the Bank of England to keep interest rates low for the foreseeable future.

Elsewhere, we have further reduced the portfolios’ cash levels, having already lowered levels earlier in the year, ensuring that the strategies now hold only a very modest overweight position. And finally, Absolute Return holdings have been selectively increased across the strategies, though alongside Commercial Property we retain our ‘underweight’ position to Alternatives within the portfolios.


Eight years into the economic cycle and with equity markets touching new highs, exceptional year-on-year returns and no sign of a correction, it is hardly surprising that many investors are feeling cautious. However, a combination of rising nominal GDP and relatively slow monetary tightening is a benign environment for risk assets, and strong 2017 corporate earnings will provide additional support. While the tapering of central bank balance sheets requires close monitoring for signs of tighter credit conditions, equities can still make progress. A modest rise in bond yields should also be expected.

The past year has seen above average sector rotation and this has provided opportunities for active investors. Falling bond yields in recent years have helped “growth” stocks out-perform “value” and, although the former are now looking expensive, valuations are still nowhere near “tech bubble” territory. If tapering by central banks results in a steeper yield curve, “value” stocks – typically represented in most markets by financials – could come back into favour. Analysts’ forecasts of a 14% increase in global corporate earnings puts world equities on a forward price/earnings ratio of 17x. This is above the longer-term average, but by no means extreme. The US looks the most expensive and Asian/ Emerging Markets the cheapest with Europe (including the UK) somewhere in the middle. Income-seeking investors will continue to be attracted by dividend yields and these are well supported by profits at this stage in the cycle.

When it comes to making investments, there is no substitute for taking specialist advice, but remember that markets can be volatile and the value of investments can go down as well as up.

For more details on how you could invest within the James & George Collie Managed Portfolios please contact Scott Middleton on 01224 581581 or by email at to arrange an appointment.

1 April 2018- Three years of LBTT and the implications for Commercial Leases

Wednesday, September 20th, 2017

4With a limited number of exceptions, all new commercial leases in Scotland since 1 April 2015 have required an LBTT return to be submitted to Revenue Scotland shortly after the “relevant date” which varies depending on the particular circumstances. In some circumstances commercial leases in place prior to April 2015 which have since been varied will also have required an LBTT return.

The treatment of leases for LBTT purposes is significantly different to the treatment of purchases of land and buildings. The reasoning is simple, the terms of a lease can and usually will change over its lifetime. A lease may be varied, extended, assigned to another tenant or indeed may come to an end earlier than originally planned. All but the shortest leases will generally contain rent review provisions and it is common for the rent to be reviewed at regular intervals and/or on any extension of any lease. Extensions can be formally documented but can also occur by operation of law where the original lease is not terminated at the end of its documented term.

The LBTT legislation does not require a further LBTT return to be submitted to Revenue Scotland every time a change to the lease takes place. Instead, it requires that unless the lease has been terminated or assigned (at which point returns also need to be made), a further LBTT return is to be submitted by the tenant at every third anniversary of the effective date of the lease. It should also be noted that in the case of an assignation the assignee will still be required to make a LBTT return on every third anniversary of the effective date of the lease as the date of the assignation does not have any impact on the relevant filing dates. An assignation made in year two, for example, will still require a return in year three, unless it is terminated before then.

These three yearly LBTT returns inform Revenue Scotland of any changes that have occurred since the original effective date or last review date and allow the amount of tax chargeable on the lease to be reviewed taking account of those changes. Depending on the particular circumstances additional LBTT may need to be paid or some may be reclaimed. It is important to note that even if the lease has not been altered in any way a further return will still be required every three years to confirm that nothing has changed!

The 30 day timescale allowed for submission of the first of these triannual returns will start to run on 1 April 2018 for those leases which have a “relevant date” of 1 April 2015. While this may seem to be a long time away it is important for tenants to be aware of their obligations and to keep accurate records to be able to meet them when the time comes. Failing to make a return when required can result in penalties being applied by Revenue Scotland and these can be quite substantial.

If you require any further information or assistance in regard to the content of this article, please contact Steven Allan on 01224 581581 or or get in touch with your usual contact  at James & George Collie.

Overseas Broadcasts of Football Matches

Wednesday, September 20th, 2017

3There have been a large number of cases recently where companies such as the FA Premier League, BT and Sky have been pursuing publicans for damages in respect of showing “live” football matches.  This area of law has become quite complex over the last few years.  There is a great deal of confusion for members of the public and for owners of public houses.  This article will aim to shed some light on the law surrounding the broadcast of football matches without permission from the Premier League or without having a Sky or BT subscription.

It is becoming increasingly common for members of the public to walk into any pub across Aberdeen to watch a football game either at 3pm on a Saturday afternoon, or one that was scheduled to be broadcast on BT Sport or Sky Sports, and instead find themselves watching a game with either a small time delay or from an overseas broadcast.  There are a number of companies operating throughout Scotland who provide publicans with equipment to be able to show overseas transmissions of football matches which would otherwise not be broadcast in the UK or only broadcast through Sky Sports or BT Sport.  These companies are not acting in an illegal manner as there is nothing to prevent anybody from showing a football match on TV.  Any pub can transmit a broadcast of a football match to the public without the requirement of a licence however what it cannot do, is show what is referred to as “the copyright works”.  The copyright works include, but are not limited to, any logos, music, and sound effects which are played that are protected by the company.  The companies, in these cases, would be the Premier League, Sky and BT.

As a result, many of the suppliers of the overseas transmissions operate a delaying system where the logos are blurred out either on BT or Sky or, if watching a 3pm kick off, a blurring of any of the Premier League logos.  If this is performed correctly, there is no breach of any copyright, as the copyright is not being broadcast to the public.  However, many publicans are being caught because they are showing games where logos are appearing, either on BT Sport or Sky Sports, because they are showing the wrong broadcasts.  What they are doing is showing a broadcast from Sky Sports or BT Sports instead of an overseas broadcast which they should be doing.  If they are caught with the Sky Sports logo or BT Sport logo on their screen they will likely be reported by an independent investigator and could face court action from either BT or Sky.  Many of these cases do not go to court; however these companies will insist on substantial damages being paid in order for the action to be dropped.  They will also require an undertaking to be signed giving up all of the equipment and to provide the identity of the supplier of the equipment.  The FA Premier League will also do something similar.  They will open a Court action against you for broadcasting the Premier League logo if you have displayed it on your screen without it being blurred over.

How do these companies catch so many pubs?  The FA Premier League employs officers to visit thousands of pubs across the UK every year. Inspectors from the organisation FACT visit pubs and report any broadcasts of Sky or BT to the supplier.   Once you have been caught, you will have very little choice but to pay the damages they request, or face a lengthy Court battle which will cost substantially more than simply paying the damages.  Publicans run a massive risk by broadcasting Premier League games, Sky Sports games and BT Sport games without proper licences.  As much as it is legal to broadcast any football match, it is illegal to broadcast any of the copyright works.  One slip could result in thousands of pounds of damages being paid to the FA, Sky or BT.

It should also be noted that any organisation, not just Sky, BT or the FA Premier League, may make a claim against you if their copyright works are being broadcast without permission or a licence.

We at James and George Collie can offer advice on this matter.  Please contact Greg Lawson at for more information or assistance.

Improving your chances of selling your home

Wednesday, September 20th, 2017

2With more than 98% of buyers using the internet in the search for their new home, the first few seconds’ viewing can be ‘make or break’.

Check the competition and you will see some showing bright, sunny rooms with a minimum of clutter, flowers on the table and fresh towels and bedding while others could show a dingy house with unmade beds, dirty dishes in the sink, washing on the line and toys and clothes left lying around.

These days you have to take an active part in selling your home and learn to market it properly so that it appeals to the maximum number of buyers. Put yourself in the place of buyers and imagine you are seeing your house for the first time.

The key to best presenting a house for sale is to tidy, declutter, clean, neutralise the decor, fix minor repairs, decorate if appropriate and subtly accessorise – all of which will ensure your home is looking its best and you are ready to show to potential buyers.

Consider doing some of the following:

  • Store excess and outdated furniture, books and toys off site. Do not use the loft or garage where viewers will want to look;
  • Fix chips in woodwork, cracks in plaster, broken tiles or glass and dripping taps, and replace mouldy grout or sealant in the bathroom;
  • Neutralise the decor by painting over bold colours and get rid of patterned carpets. Remove family photos and ornaments and use colour sparingly on a few accent pieces;
  • Clean outside and in, including all surfaces and floors, both sides of windows and ledges and remove cobwebs clinging to walls. Do not forget to tidy the front garden as that is the first thing buyers will see; and
  • Style and accessorise by making up the beds with fresh neutral linen, dress the table for dinner, turn on lamps and add flowers and fresh towels.

Should you wish guidance on selling your home, please contact either Mary Birse in our Stonehaven office by email at or your usual contact in the Firm.

Premises Licences – Annual fees

Wednesday, September 20th, 2017

1Janet Hood, Consultant, issues a timely reminder about annual fees for your premises licence.

Every licensing board in Scotland will have sent out demands for the payment of the annual fee to maintain premises licences.

The notices will have either been:

1. sent to the premises;

2. sent to the premises licence holder; or

3. sent to the premises manager.

Every year a large number of premises licences are revoked due to non-payment of these annual fees.

This means that you cannot sell alcohol on the premises until an application for a new licence is granted or occasional licences are granted to cover the situation. In an over provision area where the licensing board believe there are too many licences, an application for a premises licence or occasional licence might not be granted and the business will be lost.

Please instruct senior staff to open the mail, please ensure your head office opens the mail and if it is a demand for payment of annual fees please ensure they are paid immediately. It can be fatal to put these demands in a drawer for payment later!

If you are:

1. a premises licence holder;

2. a premises manager; or

3. a senior member of staff

please check to ensure someone in your organisation has paid the fees.

If you have not received a demand for payment by now, please call the local licensing board which deals with your premises licence and ask them to either confirm payment has been made or to re-send the annual fee demand to you by email to ensure they are paid.

Letters get lost in the post. It is no excuse to say you did not receive the demand.

Your future is in your hands……

Should you require further advice or guidance on any liquor licensing matter, please contact Janet Hood by email at