Some key highlights from legal updates affecting the Private Client industry over the past month are as follows.
Offshore – ROE consultation on trusts
The UK government has published a consultation on widening public access to trust information held on the Register of Overseas Entities (“ROE“). The consultation closes on 21 February 2024. Wedlake Bell’s Private Client Team will be responding. UK government consultation begins on wider access to information on trusts that own land | STEP
Offshore – ROE regulations on verification and exceptions
On 21 December 2023, the Register of Overseas Entities (Verification and Exceptions) (Amendment) Regulations 2023 were published. The regulations exempt pension schemes from certain disclosure requirements under the ROE regime and also amend the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 so that additional information delivered under Schedule 6 of the Economic Crime (Transparency and Enforcement) Act 2022 will need to be verified. The regulations come into force on 15 January 2024. Register of overseas entities: verification and exceptions regulations
Tax policy – Spring Budget and IHT reform rumours
HM Treasury has confirmed that the 2024 Spring Budget will take place on 6 March 2024. This could be the last opportunity for the government to announce any significant changes to tax policy before the general election. It is reported that Prime Minister Rishi Sunak is considering announcing a possible abolition of inheritance tax (“IHT“) in the Spring Budget as part of a wider plan to increase Conservative party support ahead of the general election. The same was rumoured ahead of the 2023 Autumn Statement but no announcement on IHT was made at that event. Although, at present, this is just speculation, Wedlake Bell’s Private Client Team will be monitoring IHT policy developments and will keep clients updated. Sunak eyes IHT cut for election boost – Today’s Wills and Probate (todayswillsandprobate.co.uk); No10 plans to end inheritance tax in spring ahead of election (telegraph.co.uk)
Contentious trusts and estates – 2019 Hague Convention
The UK has formally signed the Hague Convention of 2019 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters. The Convention provides a global framework for recognition and enforcement of judgments in cross-border civil disputes between contracting parties. The contracting parties are currently the 28 EU Member States and Ukraine. At present, without the Convention, there is no comprehensive private international framework between the UK and the EU covering civil and commercial matters. The UK now needs to ratify the Convention and put in place implementing legislation and rules to facilitate the Convention’s operation. The Convention will come into force in the UK twelve months after ratification. Written statements – Written questions, answers and statements – UK Parliament; ‘Significant step forward’ as UK signs Hague Convention on private international law | Law Gazette
Wills – government storage of original Wills
The Ministry of Justice has launched a consultation on the storage of original paper Wills by HM Courts and Tribunals Service (“HMCTS“). The consultation seeks views on whether original Wills should only be held for a fixed period of time and at a certain point moved to digital only versions. HMCTS is currently storing original paper Wills going back to 1858 which reportedly comes at an annual storage cost of £4.5m. The consultation closes on 23 February 2024. Paper wills could be destroyed under proposed storage reforms; Ministry of Justice consults on storage and retention of original will documents
Wills – remote witnessing legislation
The legislation enacted during the pandemic allowing Wills to be validly executed if witnessed via video-link (the Wills Act 1837 (Electronic Communications) (Amendment) (Coronavirus) Order 2020) will effectively expire on 31 January 2024 after it was initially set to apply for two years (expiring 31 January 2022) but later extended for a further two years. There is no indication of a further extension. Video witnessing: January deadline looms – Today’s Wills and Probate (todayswillsandprobate.co.uk)
Mental capacity – procedure for determining mental capacity in civil proceedings
On 15 December 2023, the Civil Justice Council (CJC) launched a public consultation on the procedure for determining mental capacity in civil proceedings. The consultation runs for three months until 17 March 2024. Civil Justice Council launches consultation on procedure for determining mental capacity in civil proceedings
Offshore – second tranche of HMRC warning letters to “Pandora Papers” clients
In December 2023, HMRC has sent out a second tranche of letters to UK residents named in the so-called “Pandora Papers“. HMRC sent out the first letters in June 2023. The second tranche of letters give recipients a response period of 60 days and warn that penalties may be charged of up to 200% of any tax due. Pandora Papers – HMRC Compliance Activity (tax.org.uk)
Tax – FTT decision highlights shortcomings of AI in legal research
In Harber v HMRC, 2023 UKFTT 1007 TC, the First-tier Tax Tribunal (FTT) upheld a £3,265 penalty imposed on a woman who failed to pay capital gains tax after disposing of a property, finding that she unwittingly relied on fake case citations invented by AI software. Litigant unwittingly put fake cases generated by AI before tribunal – Legal Futures