Some key highlights of legal updates affecting the Private Client industry over the past month are as follows.
Offshore – consultation on transparency of trusts under the ROE
The consultation period has now closed for the government’s consultation on “The Transparency of Land Ownership Involving Trusts”. The consultation included proposals for extending access to trust information held on the UK register of overseas entities (“ROE”). Such information is currently not publicly accessible (unlike other ROE information) and is only available to HM Revenue & Customs (“HMRC”), law enforcement agencies and public authorities. The government consider that greater access to trust information is in the public interest, may help address issues in the housing sector, and help combat money laundering and other criminal activity. In the consultation document, the government put forward various options ranging from full public access to maintaining the status quo. The consultation document also discussed whether information on minors should be restricted to those who can demonstrate a “legitimate interest” in the information. The government is now reviewing responses and has confirmed that any decisions made will be accompanied by a full impact assessment. Transparency of land ownership involving trusts – GOV.UK (www.gov.uk)
Mental capacity – role of certificate provider
The Court of Protection (“COP”) has confirmed in TA v The Public Guardian, 2023 EWCOP 63 the steps that a certificate provider under a Lasting Power of Attorney (“LPA”) must take in order for their certificate to be valid. Under Schedule 1 of the Mental Capacity Act 2005, a certificate provider must satisfy themselves that: (i) the donor understands the purpose and scope of the LPA; (ii) there is no fraud or undue pressure is being used to induce the donor; and (iii) there is nothing else which would prevent an LPA from being created. The COP conformed that a certificate provider must take steps to form a reasoned opinion on these matters and is not merely signing the LPA as a form of witness. If the evidence shows that the certificate provider did not have such an opinion because, for example, they had not spoken to the donor, the LPA may be invalid. EWCOP confirms that LPA certificate provider must check MCA 2005 conditions are satisfied | STEP
Probate – new probate/ IHT421 procedures
HM Courts & Tribunals Service (“HMCTS”) introduced, on 17 January 2024, a new procedure for probate applications so that these cannot be commenced until a “code” from HMRC has been received following payment of the estate’s inheritance tax (“IHT”). This new procedure replaced the receipted IHT421 form. It has since been discovered by practitioners that is it not possible to start drafting the probate application (or produce the legal statement) until the HMRC code is received. It is common practice, particularly given the current delays with HMCTS processing probate applications, to draft the probate application as soon as possible so that this can be submitted once HMRC confirm receipt of the estate’s IHT payment; so this change is a setback. It has been reported that the issues with the new procedure were covered in a Probate Professionals User Group meeting and professional bodies have also met with HMCTS separately. HMCTS have said that they are in “a review period” with the new process and are collating feedback from practitioners and organisations, and once all feedback has been collated, will consider any suitable changes to the process. HMCTS addresses concerns raised by probate professionals in feedback session – Today’s Wills and Probate (todayswillsandprobate.co.uk)
Wills – reform expected in 2025
It has been reported that the Law Commission is aiming to publish, in early 2025, its final report on the reform of the law of Wills following its “2023 Supplementary Consultation Paper: Making a Will” (“Wills Consultation”) and will instruct Parliamentary Counsel to draft a “Wills Bill 2025” that would give effect to the recommendations. The Wills Consultation covered two main issues: electronic Wills, and the rule that marriage/civil partnership revokes a Will. Law Commission resumes will reform project, targeting draft Wills Bill 2025 by next year – Today’s Wills and Probate (todayswillsandprobate.co.uk)
Wills – remote witnessing legislation now expired
The government has confirmed that amendments made to the Wills Act 1837 during the Covid-19 lockdowns to allow remote witnessing of a Will in England and Wales expired on 31 January 2024 and will not be extended. This means Wills must again be signed in the presence of two independent witnesses. As above, the Law Commission is, however, currently developing proposals for a permanent change to the law in respect of electronic Wills so it is possible that the position may change in future. Written statements – Written questions, answers and statements – UK Parliament
Private Client disputes – remote hearings
HMCTS is planning to roll out its video hearings service nationally towards the end of 2024. The system provides virtual meeting rooms enabling secure pre-hearing consultations and negotiations as well as private meeting rooms for judicial office holders to deliberate. The system is already being used in the civil and family jurisdiction in a small number of courts and by tribunals including the property, tax, employment and immigration chambers. Looking at the future of remote hearings – Inside HMCTS (blog.gov.uk)
Contentious estates – “unless order” case
In Phipps v Goulbourne, 2024 EWHC 130 Ch, a daughter lost her chance to propound a Will allegedly made by her mother because her claim was not submitted in time to comply with an “unless order” issued by a district registrar via the probate service. The terms of the “unless order” were that unless the daughter served a probate action in the Chancery Division within 28 days to propound the alleged Will, a grant would issue as if this Will was invalid. Her failure to meet the deadline was partly due to her legal adviser not realising that proceedings in the Chancery Division had to be served by the parties themselves and not the court. Phipps v Goulbourne (Re the Estate of Tetla Yvonne Goulboure otherwise Tetla Yvonne Butler) [2024] EWHC 130 (Ch) (26 January 2024) (bailii.org)
Tax – HMRC “nudge letter” to shareholders on inferred distributions
HMRC is writing to a large number of company shareholders who it suspects have not declared income from distributions or dividends on their self-assessment tax return. It is focusing on companies whose accounts show a large drop in profit and loss account reserves, indicating a possible distribution/dividend to shareholders. The mailing commenced on 5 February 2024 and recipients are being given 30 days to respond. HMRC One to Many letter – Inferred Distributions (tax.org.uk)