Legal News

Clipperton and another v HMRC [2024] EWCA Civ 180 Under an arrangement dubbed ‘ Aikido’, the taxpayers’ company, WY, formed a subsidiary ( WS) that created A shares and a single B share. WY transferred the B share into a trust, under which WY retained an ongoing interest, with a sum to be paid to charity, though the principal beneficiaries were the two shareholders. WY then subscribed for another WS A share at a hefty premium, and WS thereafter implemented a reduction of capital, generating distributable reserves. The result was that, when WS declared a substantial dividend on the B share, the shareholders then became entitled to virtually all of the proceeds. HMRC contended that, notwithstanding the elaborate steps through which WY’s profits moved, the funds amounted to a distribution by WY once they reached the shareholders. The taxpayers maintained that there was a...

Leonard and others v Leonard (by her litigation friend Sharon Thompsett) and others [2024] EWHC 321 ( Ch) What are the practical implications of this case? Banks v Goodfellow The common law test for testamentary capacity is well recognised by litigators practising in this area. Under Banks v Goodfellow (1869-70) LR 5 QB 549, a testator has capacity only if they can satisfy the following: be capable of understanding the nature and effect of making a Will be able to understand the extent and value of the property or estate they are disposing of be able to comprehend and properly weigh the claims to which they ought to give effect have no disorder of the mind that distorts their sense of right or prevents the natural exercise of their faculties when disposing of property by Will The judge held that the first limb...

Mark Stolkin and others v HMRC [2024] UKFTT 160 ( TC) The taxpayers were shareholders in a company that purchased a sizeable plot of land in West London (the Site). The company classified the Site as a fixed capital asset of its investment business and, having regard to the company’s original intentions for the property, the FTT concluded that this treatment was correct and appropriate at the time. The Site was the company’s sole fixed asset at that stage. The company altered its plans for the Site after the competent planning authorities relaxed restrictions (on their own initiative, without any prompting whatsoever by the company). The company then subsequently obtained more advantageous planning permission and endeavoured to secure an even stronger position before ultimately selling the Site. Just shy of three years after the acquisition, the company purported to appropriate the Site to...

Rea v Rea and others [2024] EWCA Civ 169 What are the practical implications of this case? This decision matters for probate professionals and is must-read material for those advising on claims of undue influence over the making of a Will. Advisers supporting clients who propose to assert undue influence in relation to a testamentary instrument should examine it closely. Bringing such an allegation is weighty. The classic formulation, given many years ago by Lord Cranworth LC in Bosyse v Rossborough (1857) 6 HL Cas 2, 10 ER 1192 (not reported by Lexis Nexis®UK) at paragraph [51], states in effect that to invalidate the will of a person of sound mind, it is inadequate to show circumstances compatible with undue influence; it must be demonstrated that they cannot be reconciled with any alternative explanation. That articulation has been regarded as pitching the test too high (see...

In this issue: Probate Court of Protection UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Budgets and Finance Bills Digital assets and cryptoassets Spring Budget 2024 Charity and philanthropy Contentious trusts and estates Pensions, insurance and tax efficient investments Scotland, Wales and Northern Ireland 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 Probate HMCTS updates form COP44A, guidance ( COP44B) and process for applying for help with COP fees HM Courts & Tribunals Service ( HMCTS) has revised form COP44A and the guidance ( COP44B) for applying for help with Court of...

Thompson v HMRC [2024] UKFTT 138 ( TC) The taxpayer had been employed in IT until 2013, when he chose to work for himself as an IT consultant. He secured assignments through an organisation ( BFB) that specialises in IT contracting, operating on the basis that he would be paid under the Pay-as-you-earn ( PAYE) regime, with deductions for income tax and National Insurance contributions ( NICs). Although the arrangements were not fully clear to the FTT, the taxpayer also received remuneration for his services from another company, Atlas Trustees Ltd. Neither BFB nor Atlas made any deductions for income tax or NICs. Mr Thompson’s 2013–14 tax return reported his employment income but omitted the amounts paid by BFB and Atlas. After opening an enquiry, HMRC wrote to the taxpayer setting out the further tax due and stating that HMRC......

Monmore Properties Ltd v HMRC [2024] UKFTT 127 ( TC) The appellant acted as the representative member of a Value Added Tax ( VAT) group. The tribunal’s determination arose from a preliminary hearing convened to resolve two threshold issues: whether the appellant’s appeal had been brought within time, and whether HMRC’s assessments covering a 27‑month span (five VAT return periods) were out of time. The broader controversy was not addressed at this stage, as it was a matter for the substantive appeal, and concerned the VAT treatment of services provided by VAT group members to persons outside the VAT group. At the preliminary hearing it was also established that HMRC had not issued a single global assessment. That clarification was relevant because the wider dispute referred to......

See Q& A: H was convicted of manslaughter of W. H and W own joint bank accounts. Does the forfeiture rule apply to monies held in joint bank accounts? Section 1 of the Forfeiture Act 1982 ( Fo A 1982) states that the ‘forfeiture rule’ is a public policy principle that, in specified circumstances, bars a person who has unlawfully killed another from obtaining any benefit as a result of the killing. Under Fo A 1982, ss 2(1) and 2(4) concern the idea of an ‘interest in property’ to which the rule applies......

In this issue: Probate Court of Protection UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Budget and Finance Bills Charity and philanthropy Contentious trusts and estates Pensions, insurance and tax‑efficient investments 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 Probate HMCTS probate enquiry line—temporary reduced hours As highlighted in Private Client weekly highlights—8 February 2024— Probate, HMCTS’s probate enquiry phone service will operate on shortened hours of 9 am to 1 pm, Monday to Friday, for 12 weeks from 14 February 2024. The HMCTS Probate Service will, however, continue to be available via...

Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 What are the practical implications of the case? This ruling could mark a watershed for ADR, likely prompting a sharp rise in mediations and other ADR mechanisms across disputes. The Court stressed the need to temper any compulsion with parties’ rights under Article 6 of the European Convention on Human Rights, and underscored judicial discretion throughout the judgment, signalling balance rather than automatic coercion. Its application will turn on the facts of each dispute. How that discretion is exercised will be case by case and fact-sensitive. Although the soundness of the Council’s complaints scheme was not ultimately ruled upon, parties should note that where a clear route to ADR is overlooked, they will be expected to explain the omission to the Court. Parties who are both represented and comparably resourced, in...

See the Q& A: Does a lasting power of attorney ( LPA) allow the attorney to exercise settlor powers reserved to a donor who has lost capacity? Powers of an attorney The issue concerns a property and affairs lasting power of attorney under section 9(1)(b) of the Mental Capacity Act 2005 ( MCA 2005). With this form of LPA, the attorney may make any decision or take any step the donor could have taken about their property and affairs. Under section 9(4) MCA 2005, the authority given by an LPA is subject to: the provisions of the MCA 2005, notably section 1 (the principles) and section 4 (the duty to act in the donor’s best interests); and any conditions or restrictions specified in the instrument itself. The donor may expressly narrow or expand the attorney’s powers......

Metatron DOO v HMRC [2024] UKFTT 115 ( TC) The appellant, a company established and registered for VAT in Slovenia, challenged HMRC decisions refusing repayment of amounts it says were wrongly charged by UK suppliers. Those amounts arose when it purchased goods from UK suppliers via the e Bay platform. The appellant explained it had asked the suppliers to apply the zero rate of VAT to the goods, but that request was declined. HMRC applied to have the appeals struck out on the basis that, under rule 8(2) of The Tribunal Procedure ( First-tier Tribunal) ( Tax Chamber) Rules 2009, SI 2009/273, the FTT had no jurisdiction to consider HMRC’s refusal to provide a refund in such circumstances, and, under rule 8(3), there was no reasonable prospect of the appeals succeeding. The purchases in question were made through e Bay from UK sellers and, the...

In this issue: Probate Court of Protection UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Budgets and Finance Bills Contentious trusts and estates Pensions, insurance and tax efficient investments 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& A Useful information Probate Law Society responds to Ho C Justice Committee’s probate inquiry The Law Society of England and Wales has submitted evidence to the House of Commons ( Ho C) Justice Committee on the probate service’s performance. Since 2018, practitioners have experienced ongoing, serious difficulties, with current reports indicating waits of over 30 weeks and, in some cases, more than a...

Re the estate of Mc Kay (deceased); Pead v Prostate Cancer UK and others [2023] EWHC 3224 ( Ch) What are the practical implications of this case? When defective Will drafting triggers a dispute, rather than immediately bringing a negligence action, the litigants can, following judgment in the substantive claim, seek to join the Will-drafter to obtain a third-party costs order under Part 46.2 of the Civil Procedure Rules 1998. That course is open whether or not the underlying claim was successful. In this matter, although rectification was refused, the Court accepted the claim had been reasonably advanced. While the claimant should shoulder a portion of the costs, there were significant failings in the manner in which the testator’s instructions were obtained, noted and confirmed, which could properly be said to have precipitated the proceedings and led to the claims. The drafting...

Representation of Zedra Trust Company ( Suisse) SA re C and D Trusts [2023] JRC 213 What are the practical implications of this case Although resolved on its own facts, the court offered broadly useful guidance for trustees managing dynastic trusts intended to support multiple generations. As a family’s philosophy evolves, trustees should assess whether the trust still embodies that shift and, if not, consider whether substantive modifications are required. The ruling will interest practitioners as it confronts public policy and human rights considerations within the framework of trust deed provisions and settlors’ expressed wishes. It underlines that letters of wishes are not binding on trustees, and certainly not on the court, and demonstrates judicial backing for a trustee departing from a settlor’s clear wishes to prevent family discord, here arising from the exclusion of the female line from...

See Q& A: When preparing a deed of variation in an Inheritance ( Provision for Family and Dependants) Act 1975 claim, is it necessary to make an election within the deed for inheritance tax and capital gains tax purposes? When resolving an Inheritance ( Provision for Family and Dependants) Act 1975 ( I( PFD) A 1975) claim, careful attention must be given to potential tax consequences. Such a claim can be concluded by a deed of variation. If the deed is completed within two years of death, and the further requirements in section 142 of the Inheritance Tax Act 1984 ( IHTA 1984) are met, it is treated as taking effect from the date of death. To secure this ‘read-back’ treatment, the deed must contain a statement confirming that the parties intend IHTA 1984, s 142(1) to apply to the variation (often...

North East London NHS Foundation Trust v Beatrice (by her litigation friend the Official Solicitor) and another ( No 2) [2023] EWCOP 60 What are the practical implications of this case? This is Mr Justice Mostyn’s assessment of B’s best interests, measuring the stark alternatives of life and death through five components [(1–5) below]. The two principal forces are: the robust presumption for preserving life, reflecting the categorical terms of Article 2 ECHR in both its mandatory and prohibitory dimensions, and the wording of MCA 2005, s 4(5) (paras [2, 3, 11]) a core facet of personal liberty— B’s wishes, feelings, beliefs and values. The Official Solicitor submitted, and Mostyn J “strongly agrees”, that the “fundamental precept” is that we are “free people entitled to live our lives as we choose, subject only to general lawful constraints”, even where capacity is absent (paras...

Williams v Williams and others [2024] EWCA Civ 42 What are the practical implications of this case? The key takeaway is that where a commercially used property is owned jointly, and the co-owners have neither stated their beneficial shares in an express declaration nor reached a proven express agreement, the default position is that the beneficial interests are held as tenants in common rather than as joint tenants. That contrasts with the longstanding general presumption of beneficial joint tenancy for homes and other domestic property. The difference matters particularly on the death of one co-owner, when rival claims may arise about the scope and proportion of the beneficial interests. What was the background? The dispute centred on a long-established family farm situated in West Wales. The parties to the claim were brothers and sisters. Their father had for many years previously worked the holding as a tenant. In 1986, the...

In this issue: Probate Court of Protection UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Insolvency— Private Client Digital assets and cryptoassets Charity and philanthropy Contentious trusts and estates Pensions, insurance and tax efficient investments 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 Probate HMCTS probate enquiry line—temporary reduced hours From 14 February 2024, and for 12 weeks, the HMCTS probate helpline will run on reduced hours: 9am to 1pm, Monday to Friday. The HMCTS Probate Service remains available via web‑chat from 9am to 5pm, Monday to Friday. Source: HMCTS Probate Linked In post. Mo J urges those entitled to claim dormant funds held by CFO to act now The Ministry of Justice has urged anyone eligible to reclaim dormant monies held by the Court Funds Office to act promptly, as the...

Court of Appeal highlights differences between applications for assessment under section 71(3) of the Solicitors Act 1974 ( SA 1974) and applications for assessment under SA 1974, s 71(1) ( Daniel Kenig v Thompson Snell & Passmore LLP) Daniel Kenig v Thompson Snell & Passmore LLP [2024] EWCA Civ 15 What are the practical implications of this case? The bills at issue, issued between 17 October 2021 and 2 August 2021, totalled £54,410.99 plus VAT. Although an initial estimate of £10,000.00 to £15,000.00 was cited, they will, it appears, now be remitted back to the SCCO for an actual assessment. It seems highly probable that the sums claimed will be materially pared back once the expense of the appeal is taken into account. Notably, an application for assessment under SA 1974, s 71(3) permits the consequences of any assessment to be placed at multiple doors......