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Trusts and Estates Law and Tax Journal: October 2016

A new consultation document from HMRC has important ramifications for the practitioner. Geoffrey Shindler reports

August used to be known as ‘the silly season’ where nothing much happened in the world of politics, the major summer season in Britain for the socialites having ended and they had all fled to Tuscany or the South of France. All we used to be left with were shock horror stories about the sighting of the Loch Ness Monster and spiders leaping out of packs of bananas and devouring lower middle class housewives whole, or the good news about how students are becoming increasingly cleverer because they get better A level and GCSE results (although as we all know this is just a matter of where you choose to draw the line on the pyramid between A star, A and the rest).

Wilsons

Imogen Buchan-Smith provides an update on changes to the UK tax treatment of non-doms and their structures

The Budget of 8 July 2015 saw the announcement by the Chancellor of many proposed changes to the UK tax regime for non-UK domiciled individuals and the trust structures of which they are settlors and/or beneficiaries, with the intention that these changes will come into effect from 6 April 2017. The rationale behind the alteration of the existing tax regime is the equalisation of the tax treatment of three key categories of person – long-term-resident non-domiciled individuals, formerly UK-domiciled residents, and investors in the UK residential property market – with that of UK resident and domiciled individuals. The government, however, declared its intention that the measures that would be introduced would be ‘carefully targeted to address some unfairness in the current rules in a way that will not deter those [non-domiciled] individuals who might be considering a move to the UK’. Non-domiciled individuals planning to reside in the UK in the short and medium term would therefore not be affected by the new rules.

Alexander Drapkin discusses a recent case which indicates the factors the court takes into account in a dispute over where a body should be buried

The case of Anstey v Mundle [2016] concerned a dispute between one of Mr Carty’s daughters, Valerie, and on the other side another of Mr Carty’s daughters, Sonia, and one of his nieces, Cynthia. Mr Carty had died and the parties could not agree about how to dispose of his body. Valerie contended that Mr Carty’s body should be buried in England and the defendants argued that his body should be transported to Jamaica and interred there beside his mother.

William Batstone examines the Court of Appeal decision in Davies v Davies [2016]

Tegwyn and Mary Davies have farmed in West Carmarthenshire since 1961 and they continue to do so now in their mid-seventies. They have three daughters: Enfys, Eirian and Eleri; and by the time Eirian was 17 it had become clear that she was the only one interested in taking over the farm. The press coverage of the case described her as the ‘Cowshed Cinderella’ because in court she said that she missed out on Young Farmers’ Club dances with her sisters because she had to muck out and do other chores on the farm. It was Eirian’s case that she undertook long hours of such work for low or no pay because of what her parents had told her about her succeeding to the farm. Eirian is an accomplished stockwoman whose hard work and passionate dedication helped her parents produce what Floyd LJ described in Davies v Davies [2014] at [59] as ‘a prodigious Holstein pedigree milking herd and a highly successful business’. That earlier decision of the Court of Appeal dismissed the appeal by Tegwyn and Mary against the finding of HHJ Jarman QC in Davies v Davies [2013] that Eirian had raised an equity against her parents by virtue of the principles of proprietary estoppel. The parties were unable to fulfil the hope expressed by Floyd LJ at [59]:

A recent case highlights the importance of meticulous implementation when tax planning. Emma Pearce explains

This article discusses the First-tier Tribunal’s (FTT) decision in Trustees of the Morrison 2002 Maintenance Trust v HMRC [2016].

Peter Steen and Bethan Byrne consider firewall legislation and analyse the continued conflict with the English Family Division

The current buzzwords of the offshore worlds are ‘transparency’ and ‘accountability’. In that context, asset protection legislation, commonly known as ‘firewall’ legislation, can increasingly seem something of an anomaly. Firewall legislation seeks to defend and protect offshore trusts from attack – whether from creditors, spouses or heirs – and from pressure from the onshore world. Matters concerning trusts established in offshore jurisdictions are, instead, for the local court applying local law. The message from jurisdictions in which such legislation has been enacted is that local courts will not simply kowtow to orders made by onshore courts.

Patel v Mirza [2016] establishes a flexible approach towards the illegality defence. Gareth Keillor and Rosanna Pinker analyse the pros and cons

It has been established for almost 250 years that ‘no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act’ (Holman v Johnson [1775]). However, the courts have been grappling ever since with the extent to which this maxim applies and precisely what it means. While public policy considerations have always underpinned this defence, the 1993 House of Lords decision in Tinsley v Milligan [1995] introduced a new ‘reliance test’, effectively putting to one side considerations of public policy and instead focusing on whether the claimant is required to rely on their illegality in order to establish their claim. The decision in Tinsley has been much criticised and has ushered in a prolonged period of uncertainty and division regarding the correct approach to the defence. Conflicting approaches by the Supreme Court in cases such as Allen v Hounga [2014] and Les Laboratoires Servier & Anor v Apotex Inc [2014] have left this area of law in a state of confusion and disarray, and created what has been described as a ‘schism’.