Legal Practice Notes

How can a director be disqualified? There are several routes by which a director can be disqualified, spanning various provisions of the Company Directors Disqualification Act 1986 ( CDDA 1986) and the Insolvency Act 1986 ( IA 1986). These include disqualification on bankruptcy and through a bankruptcy restrictions order ( BRO) or a bankruptcy restrictions undertaking ( BRU). For further guidance, refer to the following Practice Notes: Practice Note: How can a director be disqualified as a company director? Bankruptcy restrictions orders and undertakings—overview This Practice Note is not intended to cover every restriction arising from a BRO, BRU or bankruptcy. For full details, see the separate Practice Note: Effect and duration of bankruptcy restrictions orders ( BROs). The scope here is limited to restrictions resulting from disqualification under CDDA 1986, section 6. It also excludes the restrictions under IA 1986, section 216...

ARCHIVED : This archived Practice Note summarises the former special tax treatment regime applicable to furnished holiday lettings before its removal by the Finance Act 2025. It is presented for historical information only and is not maintained or kept up to date any further. Abolition of the special tax treatment of commercial letting of furnished holiday accommodation The Finance Act 2025 ( FA 2025) contained provisions that abolished the favourable tax treatment for furnished holiday lettings that satisfied specified tests. Consequently, furnished holiday lettings businesses will be treated, for tax purposes, in the same way as any other property letting business......

Civil investigation of tax fraud HMRC’s stated approach to tax fraud is to favour civil procedures rather than criminal ones wherever appropriate, and where a civil route is suitable it will be pursued. Pursuing criminal enquiries and prosecutions is costly and, as a result, runs counter to HMRC’s revenue‑raising function. Accordingly, criminal action is reserved for instances where it will operate as an effective deterrent or where there are aggravating features, such as involvement in an organised plan. As an alternative to a criminal investigation, where deliberate behaviour has brought about a loss of tax, HMRC may employ its civil investigation of fraud process as set out within Code of Practice 9 ( COP9). COP9 operates through the Contractual Disclosure Facility ( CDF), which gives the recipient the opportunity to make a full disclosure of their conduct, with HMRC agreeing not to commence a...

Archived: This archived Practice note considers the definition of relevant person under section 809M of the Income Tax Act 2007 for the purposes of the remittance basis of taxation Abolition of the UK's existing tax regime for UK resident non- UK domiciled individuals On 29 July 2024, the Chancellor, Rachel Reeves, confirmed that from 6 April 2025 the government will proceed with scrapping the UK’s current rules for UK-resident, non- UK domiciled individuals (‘non-doms’) and introducing the new four-year foreign income and gains ( FIG) exemption first announced by the previous government at the March 2024 Budget. The four-year FIG exemption will be available to people who become UK resident after being non- UK resident in each of the preceding ten tax years. Eligible individuals will not be liable to UK tax on their overseas income or gains, or on income and gains arising in trusts they have...

This Practice Note explains when a person that has incurred VAT on supplies it has taken receipt of may reclaim that VAT from HMRC. It outlines why VAT is recoverable, what amounts can be reclaimed, the rules for allocating input tax to subsequent supplies, and the process for reclaiming VAT. It also considers particular scenarios, including whether VAT can be reclaimed before VAT registration and whether input VAT can be reclaimed where it has not been paid. Why can VAT be recovered? As set out in Practice Note: What is VAT?, under core principles, VAT should be: borne by the final consumer, and deductible by businesses at each production or retail stage, provided their activities are themselves subject to VAT, as expanded on in this Practice Note If recovery were not available in this way: VAT would not be levied solely on...

The nature of a discretionary trust Underhill and Hayton: Law of Trusts and Trustees offers a clear account of what marks out a discretionary trust. Such a trust exists where beneficiaries’ shares are not predetermined but hinge on the use of discretionary dispositive powers held by trustees or other authorised holders. A straightforward illustration is a settlement under which assets are placed with trustees to divide the income among such of A’s children and grandchildren as they consider appropriate. Less intuitively, the label also applies where beneficiaries hold fixed distributive rights that can nevertheless be defeated if a power is exercised to appoint the property to another person (see Underhill and Hayton— Fixed and discretionary trusts [5.5]). In a discretionary trust, the trustees are empowered to pay or apply income, capital, or both, to or for the benefit of all, or any one or more, to the...

Cy-près definition In situations where a clear charitable intention is articulated, but it will not potentially fail because the chosen mode cannot be carried out, the cy-près doctrine permits another means to be adopted that is the closest possible to the donor’s specified method, which is why the doctrine bears its name. The cy-près doctrine now has a partial statutory basis in Part 6 of the Charities Act 2011 ( CA 2011). This note preserves much of the pre‑2011 material. A separate Practice Note deals with charitable schemes, including cy-près schemes, established under CA 2011, s 67......

It will hardly surprise practitioners that their older clients are the most vulnerable to financial abuse. Frequently, the wrongdoing is not uncovered or detected until after it has occurred. Whether any redress is available after the event largely depends on the nature of the fraudulent conduct that has been carried out. Accordingly, the principal bases under which a claim may properly be advanced are: common law fraud, sometimes referred to as the law of deceit equitable fraud — breach of fiduciary duty where one party assumes responsibility for the property and affairs of another undue influence where the advantage to one party is entirely out of proportion to the consideration given mistake the liability of third parties Once it is established that the client falls within one of these categories, there are several potential remedies that can be pursued...

Background The Mental Capacity Act 2005 ( MCA 2005), together with its Code of Practice (the Code), makes provision for advance decisions. Although numerous cases and judgments had addressed such decisions, MCA 2005 represents an effort to draw together the common law rules and place them within a clear legislative framework. The relevant parts of MCA 2005 are sections 24–26, and these are to be read alongside, and in conjunction with, Chapter 9 of the Code. An advance decision is a declaration by a person, made while they have capacity, about choices of a medical nature that may need to be taken if, at a later stage, they do not have capacity. The common law has long accepted that an individual enjoys complete freedom to decide in advance whether to accept or refuse medical treatment, and any declaration to that effect used to be...

Nature of duties The distinction between a duty and a power is clear: performing a duty is mandatory, whereas powers are, to varying extents, matters of discretion. A trustee’s obligations to a beneficiary are fiduciary in character. Ordinarily, the court will not force a trustee to exercise a mere power against their wishes; however, it will require the performance of powers attached to a trust that possess the nature of a trust or obligation, as recognised in Mc Phail v Doulton: ‘ Where duty and power are coupled the court can compel the trustees to perform the duty.’ A trustee who does not fulfil their duties commits a breach of trust. Trust property The common law duty A trustee must enquire into the trust property, take control of it, and then ensure its preservation: where there are multiple trustees, title to trust property must be in the joint names of them...

This Practice Note is aimed at real estate practitioners. It sets out the fundamentals of liquidation and highlights the principal provisions that contracts for the sale of land should include where the seller is in liquidation. Liquidation, also known as winding up, is the means by which a company is brought to a close. When a company enters liquidation its business comes to an end, though it may need to continue briefly as part of the winding-up process (eg to enforce any valuable contracts). During that process, the company’s assets are realised and the proceeds are distributed to those entitled......

Farm business tenancies Farm business tenancies took effect on 1 September 1995 under the Agricultural Tenancies Act 1995 ( ATA 1995). They mark a clear break from the framework that applies when a tenancy of an agricultural holding is protected under the Agricultural Holdings Act 1986 ( AHA 1986). While AHA 1986 is highly prescriptive about what constitutes a tenancy of an agricultural holding, ATA 1995, in most respects, allows the landlord and the tenant to negotiate freely on almost all matters. Nevertheless, some rules are mandatory and cover: rent ( ATA 1995, Pt II) compensation ( ATA 1995, Pt III) removal of tenant's fixtures ( ATA 1995, s 8) The AHA 1986 and ATA 1995 regimes cannot overlap, so it is essential to identify accurately which form of tenancy applies. In addition, if the tenancy is a farm business tenancy, it cannot be a...

What is a grazing agreement? A grazing agreement is where a landowner permits a grazier to use the owner’s land to graze animals that belong to, or are under the care of, the grazier. Such arrangements are often put in place for the summer period ( April to October), but they can run for any length and at any time of year. Depending on the circumstances, the arrangement may amount to a licence or a tenancy. Status of grazing agreements under the Agricultural Holdings Act 1986 The Agricultural Holdings Act 1986 ( AHA 1986) provides security of tenure and other significant rights to anyone who holds a ‘contract of tenancy’ of ‘agricultural land’. ‘ Agricultural land’ covers land used for ‘agriculture’, and ‘agriculture’ expressly includes ‘grazing’ ( AHA 1986, ss 1, 96(1)). A ‘contract of tenancy’ is defined as a ‘letting of land, or...

Unlike maintained schools, academies and free schools receive their funding straight from the Department for Education ( Df E), rather than from or through the local authority for the area in which they are based. This central government money is managed on the Df E’s behalf by the Education and Skills Funding Agency ( ESFA). Note: there are no academies in Wales. While the Academies Act 2010 ( Ac A 2010) does extend to Wales, the sections allowing the establishment and financing of new academies apply solely in England......

ARCHIVED: This Practice Note has been archived and is not maintained. This Practice Note applies solely to England. There are no free schools in Wales. Although the Academies Act 2010 ( Ac A 2010) does extend to Wales, the provisions on creating and funding new free schools operate only in England. This category of independent school was introduced in 2010 as a new type. Free schools are technically defined as independent schools; however, the independence in question is from the local authority of the area in which they sit, not from the state itself. Free schools are funded and regulated by the Department for Education ( Df E). Free schools and academies In legal terms, free schools are academies created or operated under the Ac A 2010. A practical distinction is that academies commonly began, when first established, by replacing earlier maintained schools, usually in the same...

This Practice Note outlines the courts' approach to pre-nuptial or pre-marital agreements, and summarises leading case law from before and after the Supreme Court decision in Radmacher (formerly Granatino) v Granatino. It also reviews the Law Commission’s report on matrimonial property, needs and agreements, and the notion of qualifying nuptial agreements. See also Practice Notes: Marital and civil partnership agreements—disclosure Marital and civil partnership agreements—independent legal advice Marital and civil partnership agreements—drafting and formalities Marital and civil partnership agreements—international aspects What is a pre-nuptial agreement? A pre-nuptial (or pre-civil partnership) agreement is made by parties planning to marry or enter a civil partnership, setting out how their affairs should be managed if the relationship ends. For most, the emphasis is on financial arrangements, though the parties may also stipulate the jurisdiction in which any divorce or dissolution should proceed. While pre-nuptial agreements are not formally binding in England and Wales, the...

Fraudulent trading A defendant who operates as a sole trader, is in a partnership, or is in a trust commits the offence of fraudulent trading if they are knowingly involved in the carrying on of a company’s business either with intent to defraud creditors, or for any other fraudulent purposes. Where the offending conduct is by a company, the matter would be charged under section 993 of the Companies Act 2006 ( CA 2006). Section 9 of the Fraud Act 2006 ( Fr A 2006) widens the concept of a fraudulent business to situations where the business is not conducted by a company or other corporate body. This mirrors the offence applicable to fraudulent businesses run by companies and other corporate bodies, while extending criminal liability to non‑corporate traders, including: sole...

This Practice Note sets out the requirements for establishing a general partnership under the Partnership Act 1890 ( PA 1890). It also addresses statutory limits on the partnership’s name, the trading disclosures partnerships must provide, and the duty to prepare and retain partnership accounts. Formation To create a partnership, there is no need to file documents, register details anywhere, or complete other formalities. Two people may form one simply by beginning to run a business together and sharing profits, provided the definition below is satisfied. For an overview, see flowchart: Forming a general partnership—flowchart. For how a partnership may come to an end, see Practice Notes: Ending a general partnership—dissolution otherwise than by the court and Ending a general partnership—dissolution by the court. ‘ Partnership’ is defined in the PA 1890 as ‘the relation which subsists between persons carrying on a business in common with a view of...

This Practice Note This Practice Note is authored by Anne Redston, Barrister. It expresses her personal view; she is not authorised to represent the Tribunals Service or the judiciary. This Practice Note discusses: which taxes and other areas fall within the jurisdiction of the First-tier Tribunal ( Tax Chamber) ( FTT) the legislative foundations for the FTT’s jurisdiction the FTT’s inherent power to rule on issues of open justice the FTT operating in both adversarial and inquisitorial modes the FTT’s appellate role and its supervisory function matters outside the FTT’s remit when the FTT may exercise judicial review ( JR) jurisdiction practicalities where a case raises both public law and revenue law points the FTT’s equitable jurisdiction This Practice Note, together with the other notes on appealing to the FTT, is a summary only and does not...

Checking a Will’s validity after death A practitioner is frequently asked to verify a Will once the testator has died: commonly when instructed by the executors to prepare the probate application and handle the estate administration, when representing an individual who may wish to contest the Will’s validity, or when assisting a beneficiary who simply wants confirmation of the Will’s effect (provided they hold a copy). Even if the client’s instructions do not expressly concern validity, the practitioner should always undertake this check at the outset of an estate administration. To determine whether a Will is valid, the practitioner should review the following: the physical condition of the Will the formal requirements under section 9 of the Wills Act 1837 the contents of the Will and the construction of clauses where wording is ambiguous or apparently incomplete ...