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.
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.