Forsters was formed in 1998 by ten partners from Frere Cholmeley Bischoff, who decided to create a new firm rather than take part in a merger with a large firm based in the City. Their vision was to create a new firm with a distinctive culture which could provide a genuine alternative to City firms.Show more
Employment & Immigration
Statement of changes to immigration rules – implications for Tier 1 (Investor) visa applicants and holdersUnited Kingdom | 22 March 2019
The Home Office recently released its statement of changes setting out proposed changes to UK immigration rules. The statement contains the long-awaited details of changes to the Tier 1 (Investor) visa, which were announced in December 2018 shortly after the Home Office backtracked from its announcement that the visa was about to be suspended. The proposed changes are significant and clarity is needed with regard to the application of the transitional rules.
Private Client & Offshore Services
The Office of the Public Guardian recently launched its online service "Use a lasting power of attorney". This service enables attorneys to prove their status to service providers, such as banks or healthcare providers, by providing them with online access to a summary of the relevant lasting power of attorney (LPA). The principal benefit of the service is that it will speed up the process of verifying an LPA so that it can be used by an attorney to support a donor.
The government has announced that it will introduce a temporary change in the law to allow wills to be witnessed using video technology during the COVID-19 pandemic. The announcement has been welcomed as a necessary response to the pandemic. Some wills are being made with a particular sense of urgency and social distancing measures have meant that the requirement for witnesses to be physically present can be an obstacle.
The government has published its response to the technical consultation on the implementation of the EU Fifth Money Laundering Directive (5MLD) and the Trust Registration Service (TRS). The government appreciated that the broad scope of the changes to the TRS proposed in 5MLD raised concerns in the United Kingdom, and this understanding was reflected in its technical consultation.
The COVID-19 pandemic has had two major implications for family governance structures. In the short term, travel restrictions and health risks have prevented business as usual for the foreseeable future. In the long term, the increasing use of digital communication by families and their professional advisers is disrupting governance structures in some cases. This article provides a practical checklist for family governance in the post-COVID-19 world.
The implementation of the Common Reporting Standard and other data exchange regimes means that Her Majesty's Revenue and Customs (HMRC) is receiving substantial information about the global tax affairs of persons with connections to the United Kingdom, which will enable it to target those who may have failed to declare all of their tax liabilities accurately. One way in which HMRC is following up on the information obtained is through nudge letters, which it continues to issue despite the COVID-19 crisis.
The EU Fifth Anti-money Laundering Directive (5AMLD) has been enacted into UK law with effect from 10 January 2020, with the exception of proposed changes to the Trust Registration Service (TRS). These changes were delayed to permit a technical consultation on the draft legislation to take place between 24 January 2020 and 21 February 2020. The proposed changes to the TRS resulting from 5AMLD would significantly increase the scope of trusts that require registration.
Few would have anticipated only a few weeks ago that by March 2020 a large part of the world, including the United Kingdom, would be or have been in virtual lockdown, with many planes grounded and borders closed. However, that is the result of the spread of COVID-19. Along with the numerous health considerations, there are also a number of tax consequences for individuals with connections in more than one jurisdiction, as well as for those based in the United Kingdom.
There is much discussion of 'digital assets' these days but, when it comes to inheritance, there is no statutory definition of the term. It tends to mean things held otherwise than in a tangible sense, including emails, photos and social media accounts. When a person dies, their tangible assets pass to their executors or administrators and are distributed in accordance with their will. Unfortunately, this is not always the case with digital assets.
The All-Party Parliamentary Group for Inheritance and Intergenerational Fairness has published a paper proposing a complete overhaul of the existing UK inheritance tax rules. The paper makes thought-provoking suggestions, and it will be interesting to see whether any of the group's ideas appear in government policy or lead to a consultation in the future.
Her Majesty's Revenue and Customs has a marvellous ability to confound expectations. In the latest plot twist, it updated its Cryptoassets: Tax for Individuals guidance to include a section on the situs of cryptoassets, which is a bold departure from established principles.
In its 2019 report, Arts Council England revealed that in the past financial year, objects with an agreed value of nearly £60 million have been given to UK museums and galleries in lieu of tax. This record-breaking year serves as a reminder that cultural items continue to enter public ownership through acceptance in lieu and the cultural gifts scheme. Together with the conditional exemption scheme, tax reliefs for heritage property can provide significant tax saving opportunities.
Nuptial agreements are a crucial component of wider family wealth planning. They provide financial and jurisdictional certainty in the unfortunate event that a marriage breaks down and are particularly important for international couples with links to England. This article considers the many benefits of nuptial agreements for international families and why they are more important than ever in the context of Brexit.
The Supreme Court recently released a judgment which determined that the EU principle preventing restrictions of the free movement of capital applies to gifts of UK assets to charities in Jersey. Accordingly, persons making such gifts are entitled to inheritance tax relief in the same way as they would be if they made such a gift to a UK-based charity. For UK advisers, the case serves as a salutary reminder of the need for careful tax planning at the earliest opportunity.
The Court of Appeal recently overturned the High Court judgment in Lomax v Lomax, confirming that the courts can order early neutral evaluation even without the parties' consent. The decision – which was made in the context of a claim by a widow under the Inheritance (Provision for Family and Dependants) Act 1975 and which was strongly resisted by her stepson – will be of particular interest to private client practitioners because of the court's endorsement of early neutral evaluation in the context of family disputes.
The Office of Tax Simplification recently published a report that made recommendations to the government to reform inheritance tax. The proposal that has received the most attention is the reduction of the period during which a lifetime gift remains subject to inheritance tax in the hands of the person making the gift (the donor) from seven to five years. A number of other changes have also been suggested – including in relation to agricultural property relief and business property relief.
Divorce can pose a significant risk to a family's or an individual's wealth. However, a nuptial agreement can reduce or mitigate such risk. A common perception of nuptial agreements is that they are designed to limit the extent of one party's financial claims. While they can be used in this way, their greater utility in this context is their ability to reduce uncertainty and therefore risk.
The Court of Appeal recently overturned a first-instance decision and confirmed that the plaintiff can make a claim out of time for reasonable provision from her husband's estate. The court disagreed with the first-instance decision that to allow this claim would amount to forced spousal heirship, as each case depends on its own facts and the specific application of the factors set out in the inheritance act.
The High Court recently ruled that parties cannot be ordered to engage in early neutral evaluation or financial dispute resolution procedures where one party objects to doing so. The case in question centred on a claim brought by a widow under the Inheritance (Provision for Family and Dependants) Act against her late husband's estate and two lifetime trusts. The claimant sought variation of the trusts in order to meet her reasonable needs, but her stepson strongly resisted her claim.
When planning for the transfer of wealth to the next generation, families and their advisers must consider the context in which it will take place. On current trends, planning for changes of domicile and to counter both electronic security risks and bouts of mental illness are likely only to increase in future importance.
When one or both parties to a marriage have a connection with another country in addition to England and Wales, there are international considerations and implications to take into account when considering a nuptial agreement. This could be because of where they live, their domicile or nationality or where their assets are based. Among other things, couples should consider where an agreement should be drawn up and whether an English nuptial agreement will be upheld abroad.
With the slow but inexorable process of tokenisation, whereby real-world assets are moved onto blockchains and represented by tokens, it is only a matter of time before trust practitioners will need to look at blockchain-based trusts or 'smart trusts'. However, the beauty of the modern trust is its flexibility and the beauty of blockchain is its pre-programmability and immutability. Can these two worlds really come together?
Proprietary estoppel claims often arise in a farming and/or family context and 2018 was a bumper year for such claims. No fewer than 12 claims relying on the equitable doctrine came before the High Court over the same number of months (seven of which related to farms or farming businesses). However, this spike in cases did not translate into a high success rate, with only three claimants managing to satisfy the court in relation to the three elements required to establish an estoppel.
Shortly after rejecting a claim under the Inheritance (Provision for Family and Dependants) Act outside the statutory six-month time limit, the High Court of Justice allowed a claim to be brought 25 years and nine months after the deadline. As the statutory deadline had passed, the court exercised its discretion in favour of the claimant based on, among other things, the merits of her claim and the fact that refusing the application would leave her with no benefit from the estate and effectively homeless.
The practical process of entering into a nuptial agreement may not be as difficult as it first seems. This article provides a five-step guide which covers discussing the possibility of a nuptial agreement, engaging solicitors and agreeing headline terms, disclosing assets and liabilities, drafting and negotiating agreements and signing agreements and keeping them safe.
The prospect of discussing a nuptial agreement may seem daunting, but if approached in the right way it can form part of an important conversation about a couple's future together. If a couple can agree the central elements of a nuptial agreement before lawyers draw up the document, this will help to minimise potential areas of disagreement and can pave the way for a constructive negotiation. This article outlines tips for broaching the sometimes thorny subject of prenuptial agreements.
Raising the subject of a nuptial agreement can be a difficult task, but beneficial in the long run. A nuptial agreement can help to give a couple the freedom to decide their financial destiny rather than leaving that power to a judge in the family courts. It is a way for a couple to draw up their own rules rather than rely on the default of a legal system which may or may not accommodate individual circumstances. This article examines some of the many benefits of signing nuptial agreements.
Many feel apprehensive about raising the subject of nuptial agreements, partly due to the lack of impartial information and the influence of popular misheld beliefs. Despite the widespread belief that nuptial agreements are unfair, worthless and unromantic, they can be a sensible, fair and transparent way to discuss the financial aspects of a marriage and agree the outcome if ever it breaks down.
Her Majesty's Revenue and Customs (HMRC) recently surprised many with a statement that the government does not intend to remedy a defect in recently introduced legislation relating to the tax treatment of non-resident protected settlements. The defect means that gains realised by non-resident trustees on the disposal of offshore funds that are not registered with HMRC as having "reporting status" will be subject to income tax as they arise once the settlor is deemed domiciled in the United Kingdom.
The territorial scope of UK income tax for non-UK resident persons is generally limited to certain types of income that have a UK source. To help Her Majesty's Revenue and Customs collect the tax due on the interest received by a non-UK resident lender, the debtor is required to deduct income tax at the basic rate from the interest payments. The Court of Appeal recently confirmed that the multifactorial test is the correct approach for establishing the source of such loan interest.
The Finance (No 2) Act 2017 contains provisions requiring the disclosure of historic non-compliance to Her Majesty's Revenue and Customs by September 30 2018 (ie, the requirement to correct rule). This is part of a range of legislation targeting offshore tax evasion. Defences for failing to comply with the requirement to correct are limited and it may be insufficient to have relied on legal or tax advice. Prompt action is required to potentially avoid very significant penalties.
Her Majesty's Revenue and Customs (HMRC) recently issued an updated set of frequently asked questions (FAQs) regarding the new online Trust Registration Service and the information that certain trustees must maintain and report. In addition, HMRC confirmed further extensions to the deadlines for the registration of trusts with its online service. Details of the availability of the relevant online services have also been included in the FAQs.
The government recently enacted legislation which obliges trustees to collect, maintain and disclose information about trusts and related individuals. The information must be provided via Her Majesty's Revenue and Customs' (HMRC's) new online Trust Registration Service (TRS). As part of the regular new guidance on the practical operation of the TRS register, HMRC has released a set of frequently asked questions which deal with some areas of uncertainty.
The government recently published a consultation proposing the introduction of a 1% stamp duty land tax surcharge on non-residents acquiring residential property in England and Northern Ireland. The proposals include applying the surcharge to non-resident individuals, companies, partnerships and trusts. However, the government is considering relief for non-UK resident individuals who are Crown employees subject to UK income tax at the time of the transaction.