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
Private Client & Offshore Services
This article provides an introduction to family philanthropy, outlining the key issues that need to be considered in order to ensure a successful charitable project. These include charitable themes, funding, ways of operating, jurisdiction, the role of the family and ethical issues.
If, for whatever reason, a trust or a simple outright gift to children is inappropriate, what are the alternatives? Some years ago, much was made of so-called 'family limited partnerships' and while they remain the right vehicle for some, they are appropriate only for those with at least £10 million to spare because of the financial regulations to which they are subject. Enter the family investment company.
Making a will is a vital part of any estate planning exercise. Sharing wealth with family and other loved ones in the most tax-efficient way possible is a priority for most people. Their aim is to provide for partners and ensure that children are supported financially to achieve their goals, whether those include buying a property or starting a family or business. Given this strong desire to share their wealth, it is concerning that nearly two-thirds of adults in the United Kingdom do not have a valid will in place.
Unmarried, cohabiting couples are the fastest-growing type of family, with an increase of more than 25% in the past decade. As house prices continue to rise faster than average incomes, many young people are turning to the 'bank of mum and dad' to help with their first property purchase. While such scenarios are increasingly common, they give rise to a number of legal issues.
Governments recognise that encouraging people to start businesses and employ others is important for the economy, and that any charge to tax on disposal should be mitigated to recognise the years of work involved in building a business and the financial risk that people take in doing so. This was the principle behind business asset disposal relief when it was introduced in 2008 to replace the earlier business asset taper relief.
The reporting requirements under the EU Directive on Administrative Cooperation in the Field of Taxation (DAC6) as it applies in the United Kingdom are now restricted to cross-border arrangements falling within one specific category of hallmark, Category D, rather than all of Categories A to E listed in DAC6. This is welcome news for lawyers, accountants and other professionals in the United Kingdom working on cross-border transactions and other arrangements, and for their clients.
UK-residents who are US citizens and beneficiaries of US trusts may be taxed twice on the trust's income or capital gains because of the overlapping scope of UK and US taxation. The UK-US Double Taxation Convention may not serve as the desired panacea where there is a mismatch in both the timing of tax liabilities and the taxpayer's identity under the domestic laws of each jurisdiction. However, UK residents can mitigate this exposure.
Directors of non-UK-incorporated, non-UK tax resident companies which have some connection with the United Kingdom have an important role in ensuring that the company in question does not become UK tax resident. The Court of Appeal recently held that a Jersey-incorporated company with a majority of Jersey-based directors was UK resident. Although the facts of the case were unusual, the judgment provides some useful pointers as to what went wrong for the company and how it could have done better.
It is often easy to assume that only parties which live in the United Kingdom are required to pay UK value added tax (VAT). However, UK VAT is often paid by individuals, trustees and companies which are resident outside the United Kingdom but use the services of professionals which are based in the United Kingdom. The extent to which VAT is or is not chargeable has changed as a result of Brexit and the end of the transition period on 31 December 2020.
Capital gains tax (CGT) is a tax on the gain in value made when an individual disposes of a capital asset such as a residential property. Most people's homes are exempted from the charge due to principal private residence relief (PPR), which relieves any charge on an individual's only or main residence. However, individuals must be wary of unexpected CGT bills on their main home. The most likely cause of this is the property not being the main residence for a period, meaning that PPR has to be pro-rated.
Any legal structure incorporating family governance principles will be a hybrid of elements from corporate governance but with flexibility that is not possible in a truly commercial context; rigid structures and families rarely go together. The most successful governance structures have a level of transparency and include the wider family members within a framework of tried and tested corporate governance mechanisms.
The issue of sustainability for the charitable sector takes many guises, including in the way in which charities invest funds, but also in the activities which charities undertake and, by implication, fund. Sustainability as a theme can be observed through a number of different lenses; this article deals with the investment of funds and charitable activities in this context.
The EU Fifth Anti-money Laundering Directive was enacted into UK law with effect from 10 January 2020. It requires art businesses to implement systems intended to prevent their potential use in money laundering or for various other offences. The rules apply to those trading, storing or acting as intermediaries in works of art, where the value involved is more than €10,000. This is a significant extension to the existing rules.
The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 were laid before Parliament on 15 September 2020. Among other things, this statutory instrument (SI) implements the new Trust Registration Service (TRS) rules, as extended by the EU Fifth Money Laundering Directive, which came into force on 10 January 2020. The SI is expected to be implemented as drafted.
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.
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.