Legal Practice Notes

FORTHCOMING CHANGE relating to penalty reform calls for evidence and behavioural penalties reform: At Budget 2025, the government published a summary of responses to the consultation opened at Spring Statement 2025 on behavioural penalties reform, and confirmed its intention to move forward with proposals to amend penalties for mistakes in tax returns and for failures to notify chargeability. This consultation was informed by two earlier calls for evidence: an initial call for evidence on ‘ The Tax Administration Framework: Supporting a 21st Century tax system’ on 23 March 2021, with a summary of responses issued on 30 November 2021; and a second call for evidence on ‘ The Tax Administration Framework Review – enquiry and assessment powers, penalties, safeguards’, on 15 February 2024, followed by a summary of responses on 30 October 2024—this second exercise set out potential options to reform...

FORTHCOMING CHANGE relating to penalty reform calls for evidence and behavioural penalties consultation : Building on an earlier 2021 call for evidence, on 15 February 2024 HMRC issued a further call for evidence titled “ The Tax Administration Framework Review: enquiry and assessment powers, penalties safeguards”, which set out potential routes to reform penalties, including changes to penalty suspension and escalation for ongoing or repeated non-compliance. On 30 October 2024, HMRC published the outcome, providing a summary of responses and the government’s proposed next steps. Following this, at Spring Statement 2025 on 26 March 2025, the government launched a consultation on behavioural penalties relating to penalties for inaccuracies in returns and failure to notify. The consultation outlines two possible approaches to reform these regimes: Refining the existing framework while simplifying how penalties are calculated and applied; and Exploring a more...

FORTHCOMING CHANGE relating to penalty reform calls for evidence and behavioural penalties consultation Building on the 2021 call for evidence, HMRC issued on 15 February 2024 a further evidence-gathering document, The Tax Administration Framework Review: enquiry and assessment powers, penalties safeguards. It set out potential penalty reforms, including changes to penalty suspension and escalation where non-compliance is ongoing or repeated. On 30 October 2024, HMRC released the outcome, providing a summary of responses and the government’s planned next steps. Following this, at Spring Statement 2025 on 26 March 2025, the government launched a consultation on reforming behavioural penalties relating to inaccuracies in returns and failure to notify. The consultation outlines two possible directions for reform: Maintain the current framework while simplifying how penalties are calculated and applied. Explore a more fundamental alternative model, with a clear separation between penalties for...

FORTHCOMING CHANGE relating to penalty reform calls for evidence and behavioural penalties reform: At Budget 2025, the government released a summary of feedback to the consultation launched at Spring Statement 2025 on behavioural penalty reform and confirmed plans to proceed with changes to penalties for inaccuracies in tax returns and for failures to notify chargeability. This consultation was informed by two calls for evidence: an initial call for evidence, ‘ The Tax Administration Framework: Supporting a 21st Century tax system’, issued on 23 March 2021, with a summary of responses on 30 November 2021; and a second call for evidence, ‘ The Tax Administration Framework Review – enquiry and assessment powers, penalties, safeguards’, published on 15 February 2024, followed by a summary on 30 October 2024—this later paper set out potential options for penalty reform, including revisions to penalty suspension and escalation where...

FORTHCOMING CHANGE relating to penalty reform calls for evidence and behavioural penalties reform: At Budget 2025, the government released a summary of feedback to the consultation opened at Spring Statement 2025 on behavioural penalties reform, and confirmed plans to advance proposals to change penalties for errors in tax returns and for failures to notify chargeability. This work builds on two earlier calls for evidence: an initial call for evidence on ‘ The Tax Administration Framework: Supporting a 21st Century tax system’ on 23 March 2021, with a summary published on 30 November 2021; a second call for evidence on ‘ The Tax Administration Framework Review–enquiry and assessment powers, penalties, safeguards’ on 15 February 2024, followed by a summary on 30 October 2024; this later exercise explored options for penalty reform, including changes to penalty suspension and the escalation of penalties for ongoing or...

Dependent relative revocation Where a testator cancels a Will on the basis of a condition, that cancellation has no effect if the condition is not fulfilled. A revocation is not treated as conditional absent clear proof of the testator’s intention and purpose. Dependent relative revocation arises where the original gift is only to be revoked if a fresh disposition, made or contemplated, actually takes effect. If that new arrangement does not operate, the original disposition stands. An illustration of dependent relative revocation is found in Re Bridgewater (deceased). The testator made three Wills and wrote to his solicitor stating that the second Will was held at his bank and that he had destroyed the third Will, intending thereby to give effect to the second. On his death, only the first Will was located. The letter was accepted as admissible evidence of an...

This Practice Note sets out guidance on case law concerning claims brought under the Trusts of Land and Appointment of Trustees Act 1996 ( TOLATA 1996), highlighting the leading authorities of Stack v Dowden and Jones v Kernott. It further reviews decisions addressing the welfare of any minor and also the position of any secured creditor of any beneficiary. See also Practice Note: Eligibility to apply under TOLATA 1996, on relevant matters for the court and on the court’s powers. For practice and procedure, refer to these Practice Notes: TOLATA 1996—pre-action matters TOLATA 1996—when to issue in the County Court and when to issue in the High Court TOLATA 1996—when to use Part 7 and when to use Part 8 TOLATA 1996—procedure TOLATA 1996— Part 36 offers Stack v Dowden The principal authority on disputes between cohabitants is Stack v Dowden, where the...

This Practice Note sets out the core income tax rules that apply to a beneficiary of a discretionary trust for income tax purposes only. An individual is liable to income tax only when they are entitled to, or actually receive, income from a taxable source. For a discretionary trust beneficiary, the taxable income arises from the discretionary trust itself. The source of a beneficiary's income When a beneficiary is paid income by a discretionary trust, it is because the trustees have exercised their discretion so that the beneficiary becomes entitled to it. Accordingly, the trustees are treated as the source of that beneficiary’s income. This differs from the treatment of an interest in possession beneficiary, who is regarded as taking income directly from the trust property. See Practice Note: Interest in possession beneficiaries (life tenants)—income tax......

The courts of equity have a well-recognised jurisdiction to grant relief against the consequences of mistakes and ambiguities in a variety of contexts relating to trusts. Such matters seldom involve adversarial contention. Ordinarily, petitions for this kind of relief amount to ‘friendly litigation’, with participants collaborating to resolve the difficulty through the court process. A shadow claim in professional negligence can sit in the background, quite often against an adviser whose guidance, or omission of it, produced the error. In those circumstances, professional indemnity insurers often meet the cost of the application, providing the necessary funding. When uncertainty or an error emerges, the initial task is to identify the character of the problem so as to determine the available remedy in principle. Does it concern the wording of an instrument, or the legal effect of that instrument or a broader...

This Practice Note considers contracting authority under the law of England and Wales Recognised as a key element of forming a contract, this note examines agency principles and authority to contract across a range of entities, including: corporations in general, companies incorporated under the Companies Act 2006 ( CA 2006), unregistered and overseas companies, limited liability partnerships, general partnerships and limited partnerships, unincorporated associations, incorporated charities (charitable companies and Charitable Incorporated Organisations), and unincorporated charities (charitable unincorporated associations and charitable trusts). Where a body has separate legal status, a distinction can be drawn between instruments executed by the body itself (eg using its common seal, where available) and instruments executed on its behalf (eg by an individual acting under its authority). The emphasis of this Practice Note is on a person’s authority to contract when they execute an instrument on the entity’s behalf. It does not address the...

FORTHCOMING CHANGES to EIS and VCT financial limits and call for evidence on tax support for entrepreneurs: At Budget 2025, the government announced that the upfront income tax relief available to an individual investing in a VCT will fall from 30% to 20%. By contrast, the upfront income tax relief for EIS remains at 30%. The government also outlined three changes affecting both the EIS and VCT schemes. Specifically, the following adjustments were confirmed: an increase to the annual investment limits that companies can raise under the EIS and VCT schemes, moving from £5m to £10m, and from £10m to £20m for knowledge-intensive companies ( KICs) an increase in the lifetime company risk finance investment limit, rising from £12m to £24m, and from £20m to £40m for KICs respectively an increase to the gross assets limit that an investee company must not...

Facts Alisha passed away in May 2023 aged 89. She is survived by her spouse, Bobbie (85), their children, Charlie and Deon, and three grandchildren, Eli, Louis and Noor. At death she was UK‑domiciled and a long‑term UK resident; the position would be unchanged under the residence‑based IHT regime had she died on or after 6 April 2025. Alisha’s estate Orchard House, Hertfordshire, co‑owned with Bobbie as tenants in common in equal shares, valued at £2m. Woodland in Dorset held solely by Alisha, provisionally £80,000. Investments totalling £300,000. Current bank account balance of £50,000. Jewellery and household effects together worth £100,000. Lifetime gifts made by Alisha Upon retiring in February 2000, and using funds inherited from her mother, Alisha gave £200,000 to each of Charlie and Deon. She also made £5,000 gifts to each grandchild on their 18th birthdays: Eli received his in March 2017 and Louis in September 2019......

FORTHCOMING CHANGES : In Budget 2025, the government set out plans to legislate through Finance Bill 2026 (also referred to as Finance ( No 2) Bill 2024–26) to introduce measures aimed at promoters or enablers of marketed tax avoidance. These provisions sit in Part 6 of the Bill, as introduced on 4 December 2025, and encompass: revisions to the DOTAS and DASVOIT civil penalty framework, allowing HMRC to issue DOTAS penalties directly rather than seeking tribunal approval a broad prohibition on promoting marketed arrangements with no realistic prospect of success, and a prohibition on promoting arrangements named in universal stop regulations ( USRs). Breach of either prohibition would lead to sanctions including publication, financial penalties and criminal prosecution promoter action notices ( PAN). A PAN would require businesses to cease providing goods or services to promoters of tax avoidance where those goods or services are used in the...

Welfare benefits Welfare support has been reshaped, with several payments consolidated or replaced. Universal credit was meant to take over working‑age benefits by 2016/17, but that target was missed. The managed move from working‑age benefits to universal credit was accelerated in April 2024, with completion expected by March 2026. At present, both systems run side by side, which can cause confusion for practitioners. State benefits can be grouped into four areas: Income maintenance benefits (non‑means tested)—intended to replace earnings, with a limited amount of work sometimes permitted. They are not means tested and a partner’s income is not taken into account Benefits for disabled people and families—set to recognise the extra costs linked to disability Means‑tested benefits—assessed on both members of a couple and often acting as a top‑up because social security rates are so low Tax...

Trustees’ authority to incur costs General rule Trustees drawn into litigation will typically wish to have their own costs, and any adverse costs orders, satisfied from the trust fund. Under section 31(1) of the Trustee Act 2000, a trustee may recover from the fund, or pay out of it, expenses properly incurred while acting for the trust. CPR 19.7A provides that proceedings can be started by or against trustees, executors or administrators in that representative capacity without joining beneficiaries, and any order made binds the beneficiaries unless the court decides otherwise. A trustee issues or defends proceedings in their own name. The general position is that a trustee who is involved in litigation as trustee is entitled to be paid their costs from the trust fund on the indemnity basis, insofar as those costs are not recoverable from other parties to the case. Such...

This Practice Note is curated by Adrian Shipwright and Julian Hickey, barristers of Burnell Chambers. As a rule, transferring value to a charity is relieved from inheritance tax ( IHT), though in some cases an IHT liability can still arise for the charity. Charity exemption Separate from charitable status, an individual benefits from a £3,000 annual tax-free allowance, with any unused amount carried forward for one year to allow a single £6,000 exemption. Gifts made from surplus income, provided they are genuinely affordable from disposable income, are also exempt. Whilst these donations are significant to charities, legacies are probably the foremost source of income for many charities. The principal charity relief is set out in section 23 of the Inheritance Tax Act 1984 ( IHTA 1984). It provides that transfers of value are exempt to the extent that those transfers are...

STOP PRESS : Further to the Autumn Budget 2024 announcement on 30 October 2024, the full (100%) relief for APR and BPR on qualifying property will be capped by a combined allowance of £2.5m from 6 April 2026. See section 65 and Schedule 12 of the Finance Act 2026, which amend sections 104 and 116 onwards of the Inheritance Tax Act 1984. This Practice Note is being revised to reflect this restriction on the availability of APR and BPR. See Practice Notes: IHT—agricultural property relief and IHT—business property relief. A transfer of value on death is a single transfer covering the whole estate. Where the deceased’s Will contains no contrary direction, the general rule is that inheritance tax ( IHT) on all UK free (not settled) property vesting in the personal representatives ( PRs) forms part of the testamentary and...

FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: From 2027, stamp duty and SDRT will give way to a unified, self-assessed charge on securities—the securities transfer charge ( STC)—to be paid and filed via a new online portal. The intended shape of the STC broadly reflects the proposals consulted on in 2023. Finance Bill 2026 ( FB 2026) confers, with effect from Royal Assent, a power to make secondary legislation so that taxpayers can trial the digital service, self-assess their stamp taxes on securities liabilities, and submit transaction details electronically. Under this approach, liabilities are determined by the taxpayer and both payment and notification occur through one digital route. For more information on the modernisation of stamp taxes on securities, see: News Analyses: Budget 2025— Tax analysis— Stamp and transfer taxes Tax update spring 2025— Stamp taxes on shares...

This Practice Note examines the two different statutory definitions of 'redundancy'. This Practice Note explores the two statutory meanings of ‘redundancy’. The first appears in the Employment Rights Act 1996 ( ERA 1996). Whether that definition is met determines: if an employee qualifies for a statutory redundancy payment (see Practice Note: Entitlement to statutory redundancy payment) if, in an unfair dismissal claim, redundancy is the reason for dismissal (one of the potentially fair reasons—see Practice Note: Reason for dismissal—redundancy) For further detail on this first definition, see: Redundancy payment entitlement, and fair reason for dismissal, below. The second statutory definition is set out in the Trade Union and Labour Relations ( Consolidation) Act 1992 ( TULR( C) A 1992) and applies to collective redundancy contexts. That definition must be satisfied—together with other...

This Practice Note This Practice Note examines the legal and commercial considerations that stem from direct marketing activity. It addresses the pertinent provisions of Assimilated Regulation ( EU) 2016/679, the United Kingdom General Data Protection Regulation ( UK GDPR), the Privacy and Electronic Communications ( EC Directive) Regulations 2003 ( PECR 2003), SI 2003/2426, and the Data ( Use and Access) Act 2025 ( DUAA 2025), insofar as they relate to direct marketing (including the soft opt-in), covering live and automated calls, unsolicited email campaigns, text message promotion, and reliance on marketing lists. Alongside the UK GDPR, PECR 2003 and DUAA 2025, it also reviews other regulatory and industry frameworks pertinent to direct marketing. These comprise the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing ( CAP Code), the Data & Marketing Association’s Code ( DMA Code), the...