Legal News

See Q& A: A Will contains an appointment of the partners of a specified firm of solicitors, or members if it is a limited liability partnership, as executors, but that firm ceased trading prior to the death of the testator. How are replacement personal representatives appointed? Where a Will names the partners of a particular firm of solicitors, or the members of a limited liability partnership, to act as executors, it often also contains wording to deal with changes to that practice. Commonly, the clause provides that the appointment shall apply equally to the partners or members of any practice that succeeds to, and continues, the specified firm's business at the time of the testator's death, and may extend to the directors where a company has taken over the practice. Accordingly, if the Will includes this form of provision and, at the date of death, there is in...

Proposed rules The draft regulations span multiple disclosure measures for dealings with foreign trusts, encompassing IRC reporting duties and related IRC penalties for non-compliance. They also tackle IRC section 6039F—mandating that individuals declare substantial foreign gifts—partly through a proposed anti-avoidance provision. Broadly, the section 6039F proposals fold in guidance the Treasury first issued in a 1997 notice. According to the preamble, the package further supplies fresh direction to reflect later statutory changes and to confront specific abuses identified by the IRS. Among these additions is an anti-avoidance rule empowering the IRS to recharacterise supposed loans and other transfers from foreign trusts as gifts where it finds a transfer ‘is in substance’ a gift, the Treasury noted in the preamble. The department also stated the IRS has become aware of US......

Foulkes v Revenue and Customs Commissioners [2024] UKFTT 322 ( TC) What are the practical implications of this case? Grasping the significance of this ruling will support practitioners in guiding clients on the tightly defined regime in FA 2004 concerning which payments registered pension schemes are permitted to make and the ramifications of any unauthorised payments. The purpose of the framework is to ensure that tax reliefs and exemptions on contributions to a registered pension scheme apply only where the scheme genuinely provides for members’ retirement benefits. The sole payments a registered pension scheme may make to an individual who is, or has been, a member are those set out in FA 2004, s 164. If an unauthorised member payment is made, FA 2004, s 208 imposes an income tax charge at 40% on the recipient, referred to as the...

In this issue: Court of Protection UK taxes for Private Client HMRC Manuals updates Family businesses and ownership structures Insolvency— Private Client Digital assets and cryptoassets Contentious trusts and estates Pensions, insurance and tax-efficient investments Scotland, Wales and Northern Ireland Question of the week Additional Private Client updates Daily and weekly news alerts Lex Talk®Private Client: a Lexis®PSL community New and updated content Dates for your diary Trackers Latest Q& As Useful information Court of Protection Court of Protection proposes travel guidance for cases with a risk of future forced marriage ( Luton Borough Council v G) The Court of Protection sanctioned a six-month interim forced marriage protection order ( FMPO) concerning AG and exercised the inherent jurisdiction to govern AG’s contact with her parents. This followed material showing parental control and coercion, the prospect of AG travelling abroad for ‘a wedding’, and indications that, if parental contact matched her parents’ wishes, AG could lose capacity regarding decisions about contact with them. The court’s...

See Q& A: A DIY Will includes a bequest saying: ‘ I leave to my daughter X my property and the funds at the bank. Should she have no surviving children, it is my wish that my estate, or the equivalent of it, goes to Y’. The Will’s residuary section is left entirely blank and no beneficiary of the residue is identified. Is the gift of the bank funds effective, or does it fail for uncertainty? Is there also a partial intestacy of the residue, or does the substitution provision preserve matters and evidence an intention that the residue passes to X instead? The enquiry concerns construction and interpretation of the Will, including whether the specific legacies in favour of the testator’s daughter encompass any residuary estate. The answer will ultimately turn on......

In this issue: Trusts Court of Protection UK taxes for Private Client HMRC Manuals updates Insolvency— Private Client Charity and philanthropy Contentious trusts and estates Scotland, Wales and Northern Ireland International Question of the week Daily and weekly news alerts Lex Talk®Private Client: a Lexis®PSL community New and updated content Dates for your diary Trackers Latest Q& A Useful information Trusts Companies House publishes guidance on removal of overseas entities from register Companies House has issued guidance setting out the process for taking an overseas entity off the Register of Overseas Entities. It applies where the entity no longer holds registered title to UK land or property acquired on or after 1 January 1999 in England and Wales, 8 December 2014 in Scotland, and 5 September 2022 in...

See Q& A: If a non-domiciled deceased leaves his worldwide estate (including UK and non- UK assets) split equally between his UK domiciled spouse and chargeable beneficiaries, what amount is eligible for spouse relief? Since the individual was not domiciled in any part of the UK at death, solely their UK-sited assets may fall within scope of inheritance tax ( IHT)......

A long-established rule across many legal systems is that courts in one jurisdiction will not enforce another state’s tax demands. This so-called ‘revenue rule’ forms part of Jersey law, reflecting the leading English authority Government of India, Ministry of Finance v Taylor [1955] 1 All ER 292. Recently, however, in Re. Representation of Viberts Executors Limited and Ross Badger [2024] JRC055, the Jersey Court seized the chance to refine and develop that principle in a novel way. Facts The matter concerned the worldwide movable and immovable estates of a married, childless couple, anonymised as ‘ A’ and ‘ B’ in the redacted judgment, who retired to Jersey in 2008. A, a very wealthy US citizen, died in 2021. Her husband, B, a UK citizen, passed away a few weeks after A. By her will, A directed that the residue of her real and personal...

Battenberg v Phillips and another [2024] EWHC 3444 ( KB) What are the practical implications of this case? Wealthy individuals frequently have a global footprint, with assets and connections across multiple countries. As a result, trust and probate disputes often cut across borders. When a party is unhappy with the outcome in one forum and seeks, in effect, to run the same issues again in England and Wales, what then? In addressing this, the High Court clarified the scope of ‘abuse of process’ and affirmed that it will regard any properly constituted court as a competent forum. The judgment also touches on procedural fine points, including how pleadings must be served where there are several executors: although executors are jointly and severally liable as personal representatives, each one still needs to be served individually with the relevant documents. In addition, the Court confirmed that a consent order which...

Further to Spring Budget 2024 Following the Spring Budget 2024, the government issued a policy paper on 18 April 2024, Tax administration and maintenance summary: Spring 2024, clearly setting out the steps it is taking to further advance the modernisation and simplification of the tax regime and to address the tax gap. The approach of releasing new consultations and ongoing updates on prospective tax policy apart from the Budget itself began after Spring Budget 2021, intended to enhance both transparency and scrutiny of measures and, ultimately, the calibre of tax policy and legislation. Private Client lawyers found little of note in the Tax administration and maintenance summary: Spring 2024, yet the principal statements are set out below, alongside initial reaction from the market. For the Lexis Nexis® Tax PSL team’s take on the key business tax developments, see News Analysis: Tax...

Haworth and others v Revenue and Customs Commissioners [2024] UKUT 58 ( TCC) What are the practical implications of this case? This judgment offers a clear exploration of how residency tie-breakers in double tax treaties operate, and distils the courts’ method for pinpointing a trust’s place of effective management. Merely installing overseas trustees for a brief interval to front arrangements conceived and directed in the UK is unlikely to deliver success where a non- UK POEM is essential. The decision also leaves open whether more hands-on participation by overseas trustees in the planning phase would be adequate. With attitudes having shifted towards such ‘loophole’ arrangements since the planning in 2000, it is hard to envisage a similar structure prevailing today. What was the background? The scheme The UT heard an appeal from an FTT decision concerning a tax planning arrangement commonly called the ‘round the world’...

In this issue: Trusts Court of Protection UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Budgets and Finance Bills Insolvency— Private Client International Question of the week Additional Private Client updates this week Daily and weekly news alerts Lex Talk®Private Client: a Lexis®PSL community New and updated content Dates for your diary Trackers Latest Q& As Useful information Trusts FTT finds acquisition of property gave rise to a resulting trust ( Raveendran v Revenue and Customs Commissioners) The FTT examined an appeal against a discovery assessment arising from the disposal of a property. The taxpayer had omitted the disposal from his return for the relevant year, even though the asset was transferred to his sister-in-law. He had bought the property, in...

See: If an intermeddling executor makes an application under section 116(1) of the Senior Courts Act 1981, will this absolve them of any liability? An executor obtains title from the Will, yet retains a choice about accepting the office. They may renounce, relinquishing their entitlement to the grant and stepping aside. See Practice Note: Removal, renunciation and retirement of personal representatives and Renunciation—flowchart. However, if an executor has intermeddled by performing acts concerned with the estate’s administration, they forfeit the ability to renounce. In those circumstances, their conduct is treated as acceptance of the role, and they are taken to have assumed the executorship (see Re Stevens)......

Hargreaves Property Holdings Ltd v HMRC [2024] EWCA Civ 365 The background The borrower, a UK-resident taxpayer and the parent of a group active in UK property investment, financed its business and activities with loans from a large number of lenders. In 2004, the loan arrangements were altered with the objective that the interest would not be chargeable to UK tax, ultimately so: each lender transferred its entitlement to interest (and likewise to principal) to a Guernsey-resident vehicle for consideration very shortly before the interest fell due for payment—from 2012, once assigned to the Guernsey entity, the interest was subsequently transferred again to Houmet, a UK-incorporated and UK tax-resident company just one or two days after the assignment, the interest was paid and the principal also repaid, and the same lender then made a fresh advance equal to or greater than its prior loan to the...

Beard v Revenue and Customs Commissioners [2024] UKUT 73 ( TCC) What are the practical implications of this case? On 22 March 2024, the Upper Tribunal ( Mr Justice Roth and Judge Jennifer Dean) determined that the First-tier Tax Tribunal ( Judge Rachel Short) had rightly concluded that approximately £150m of distributions paid over a continuous five-year period to Mr Alexander Beard, a UK resident, by Glencore plc—a company incorporated in Jersey and domiciled in Switzerland—were chargeable to income tax in his hands for UK tax purposes, and did not amount to ‘dividends of a capital nature’ within section 402(4) of the Income Tax ( Trading and Other Income) Act 2005 ( ITTOIA 2005). As a result, the particular planning implemented by Mr Beard, which aimed for the payments to be treated under the capital gains tax regime, did not, subject to any further appeal,...

In this issue: Probate Elderly and vulnerable clients UK taxes for Private Client HMRC Manuals updates Budget and Finance Bills Pensions, insurance and tax efficient investments Scotland, Wales and Northern Ireland International Question of the week Daily and weekly news alerts Lex Talk®Private Client: a Lexis®PSL community New and updated content Dates for your diary Trackers Useful information Probate HMRC publishes updated IHT400 notes and guidance on applying for a grant on credit HMRC has revised the IHT400 notes to incorporate updates from the Spring Budget 2024 and an alteration to the probate process, adding a grant on credit section. HMRC has likewise issued fresh guidance on seeking a grant on credit when it is not possible to raise the funds to pay inheritance tax. See: LNB News...

Labour's Shadow Chancellor of the Exchequer, Rachel Reeves, will confirm plans to require more tax avoidance schemes to register with HMRC. Reeves says the move could bring in about £700m in 2025, rising to £5.1bn over five years. She will also pledge to shut loopholes worth £2.6bn in the non-domicile rules for people living in the UK who are recorded as non-residents for tax purposes. These rules were recently reworked as part of the Spring Budget presented to Parliament. On 8 April 2024, Reeves argued that, at a time when working people in Britain are being asked to contribute more because of the Conservatives’ economic failures, it is wrong that a minority continue to avoid paying what they owe. The Chancellor of the Exchequer, Jeremy Hunt, stated on 6 March 2024 that the government would abolish the current tax system for...

HMRC v Sehgal and another [2024] UKUT 74 ( TCC) The taxpayers were non-domiciled individuals resident in the UK who were taxed on the remittance basis. They disposed of their shareholdings in VGL to CLS, a Luxembourg-resident company. At completion, IRL—owned indirectly via a Jersey vehicle, SKS—owed £6m to a subsidiary of VGL. Under the share purchase agreement, the taxpayers agreed to indemnify that liability. Soon afterwards, it emerged the debt was irrecoverable, thereby triggering the indemnity. At the behest of CLS’s parent, a structured sequence followed: SKS purchased clothing stock from M, another company within the CLS group, for a sum mirroring the amount owed; at the same time, CLS and the taxpayers entered into a side letter confirming that this payment would reduce the outstanding debt to nil. Under these arrangements, the consideration for the clothing matched the £6m debt and, as...

See Q& A: A is named executor of T’s estate, but dies before the administration is fully finalised. In A’s Will, B is appointed as A’s executor. When, if at all, may B take over the administration of T’s estate? Section 7 of the Administration of Estates Act 1925 provides that an executor who proves their testator’s Will thereby becomes executor of any Will for which that testator was the sole or last surviving proving executor then. This chain of representation continues in perpetuity thereafter......

Nigel Barklem v HMRC [2024] EWHC 651 ( Ch) Film 2K incurred substantial tax losses in the 1999–2000 and 2000–2001 tax years (the Relevant Years). These were presented as trading losses and allocated among the partners in line with TMA 1970, s 12AA. For those years, the Claimant submitted self-assessment returns claiming sideways relief for his share of the partnership losses pursuant to what were then sections 380–381 ICTA 1988. To obtain such relief, ICTA 1988, s 381(4) required that Film 2K’s activities amounted to a trade conducted on a commercial footing, with profits that could reasonably be expected to be realised. HMRC opened enquiries into Film 2K’s partnership returns for each of the Relevant Years within time. It also told the Claimant that enquiring into the partnership return triggered deemed enquiries into his personal return under TMA 1970, s 28B(4). Under that...