Archives: July 2012
Squatting becomes a crime
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On 01 September 2012 the Legal Aid, Sentencing and Punishment of Offenders Act 2012 became enforceable. Squatting in residential homes became illegal and punishable by a fine of up to £5,000 and/ or up to six months imprisonment.
Section 144 of the Act states an offence is committed where:
- A person enters a residential building as a trespasser and remains there in the same capacity.
- The person knows or ought to know they are trespassing.
- The person has lived or intends to live there for any period.
A building includes all structures or parts of structures, including temporary or moveable structures. Buildings are residential if designated or adapted as places to live before trespassers enter. Holding over after leases or licences expire is not an offence even if the lessee or licensee leaves and re-enter the building.
Section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 replaces section 17 of the Police and Criminal Evidence Act 1984, permitting Officers to enter and search all premises to arrest a person where an offence is committed under new legislation.
There have been several recent instances of arrests under the latest legislation with penalties ranging from 12 weeks imprisonment to fines of £100. It is, therefore, likely that increasing number of cases will be brought over time as owners and occupiers gain better understanding of their rights under the law.
Penalty regime introduced by schedule 24 of the Finance Act 2007
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HMRC (the Inland Revenue) have recently become much more rigorous at imposing the penalties introduced by the 2007 Act. Penalties are charged where a document submitted to the Revenue contains an inaccuracy due to failure to take reasonable care.
The legislation sets out the use of graduated financial penalties based on the behaviour of the taxpayer and the corresponding error resulting in the inaccuracy. These range from no penalty for a mistake made despite taking reasonable care to 100% for deliberate and concealed inaccuracies.
The penalties apply to inaccuracies in returns or other documents for VAT, Construction Industry Scheme, Income Tax, Corporation Tax, Capital Gains Tax and employers’ PAYE and National Insurance Contributions.
These will apply where the due filing date of the return or document is on or after 1 April 2009 and
the period to which the return or document relates begins on or after 1 April 2008.
These are payable by the person who gives the document to the Revenue. In probates, this is usually the personal representative (the Revenue has power under paragraph 1A to impose a penalty on anyone who deliberately gives the PR false information). As legal advisors the Revenue has agreed that solicitors advising are not liable, but the liability rests with the person supplying the information.
Please please make sure that the information you give both to us and the Revenue is always accurate and timely (as there are other fines and penalties for delay). If you discover an error, please inform us immediately. In probate matters it is always advisable to instruct solicitors to deal with the estate to avoid such problems or advise you how they can be minimised. In other matters, it is important to seek the advice of an accountant.
Estate Administration - Joint Bank Accounts
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When a bank account is held by more than one person and one of the joint account holders dies, the other account holder(s) may take the original death certificate to the bank who then register the death and transfer the funds into the names of the remaining accountholders. The funds may be used immediately although the deceased’s share as at the date of death will be taken into account for inheritance tax purposes.
There was a lengthy, complex and emotive case recently (Dakeford v Cotton & other – 25/5/2012) relating to joint accounts held by a deceased and one of her children, initially so as to facilitate signing the account but later passing to the child (in exclusion of the other children) by way of survivorship. This challenge, which was unsuccessful, was still costly and time-consuming for all parties. Witness statements were submitted by most family members and family disputes were aired in public.
At Ziadies we recommend taking professional legal advice on such matters and setting out the parties intentions clearly to avoid a difficult situation arising following a person’s death.
Reduced rate of IHT where there are charitable gifts
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Taxpayers who leave 10% or more of their net estate to charity may benefit under the Finance Bill 2012 by a reduction in the rate of inheritance tax from 40% to 36%.
The provisions are complex as to ascertaining whether 10% or over of the net estate has been applied to charity and do not apply to post death variations under IHTA 1984 (s.143 & s.144).
The Inland Revenue will be working with professionals to reach an approved formula to be included in Wills which enable testators to be confident that the tax saving is achieved. It may also introduce an online calculator but this is still in consultation.
This is still in the form of a bill and has not been voted through Parliament and made into an Act, though it is believed it will be shortly. The new rate is set to apply where death occurs on or after 6 April 2012. If this is of interest to you, please contact the Wills & Probate department of this fi
Employment tribunal fee plans criticised
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The Law Society has condemned as creating a barrier to justice government plans to introduce fees for taking claims to employment appeals tribunals.
The government is consulting on charing fees in order to transfer costs of running the employment tribunal system to users and to encourage parties to resolve disputes without going to tribunal.
However, Law Society president John Wotton warned that many people who have just lost their job are facing financial uncertainty would be unable to pay fees of between £150 and £1,250.
In it’s own response to the consultation, the Employment Lawyers Association warned that charges could cost more money than they save, It said that the administrative burden of dealing with the payment and remission of fees has been ‘seriousl underestimated, undermining the aim of saving taxpayers’ money’.
The consultation closer on Tuesday.
Law Society wary on shared parenting
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The Law Society’s family law committee has cautioned against introducing a legal presumption of shared parenting after divorce, following indications that the government may seek to change the law.
Childrens minister Tim Loughton has said that the government is ‘looking closely at all the options for promoting shared parenting through possible legislative and non-legislative means.’ He said: ‘Our vision is to establish that, under normal circumstances, a child will have a relationship with both his or her parents, regardless of their relationship with each other.’
A statutory presumption of shared parenting following divorce or seperation was considered but rejected in the Family Justice Review, led by former civil servant David Norgrove, published last November. Norgrove said such a change risked creating a presumption of a parental right to shared time, undermining the principle of paramountcy of the welfare of the child set out in the Chldren Act 1989.
Naomi Angell, co-cahir of the Law Soceity’s familt law committee, said the committee would oppose a presumption of shred time, thought i supportede the idea of maintainging contact with both parents where safe to do so. The right to contact should be viewed from the child’s persepctive, Angell said/
The Ministry of Justice said it will publish its response to the Norgrove review shortly.
EPC’s – what you need to know from 6 April 2012?
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On 6 April 2012 the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) (Amendment) Regulations 2011 (SI 2011/2452) come into force. This amendment to previous legislation makes the following key changes:
- an Energy Performance Certificate (EPC) must be commissioned before marketing any buildings, whether residential or commercial, for sale or rent
- all ‘reasonable efforts’ must be made to ensure that an EPC is obtained within seven days of marketing the building; where it has not been secured during that period, there is an ‘absolute duty’ to obtain it within 21 days of the end of that period
- written property particulars, including descriptions made available electronically, must include the first page of an EPC; it is no longer possible to include only the asset rating
- the EPC must be provided to prospective buyers or tenants ‘at the earliest opportunity’ and not be delayed until shortly before the parties enter into a contract for sale or rent
- Trading Standards Officers will have increased powers enabling them to force sellers, landlords or any persons acting on their behalf (such as estate agents or letting agents) to prove that an EPC has been commissioned and to provide a copy of the EPC for inspection on request, and they can issue a Penalty Notice if evidence is not provided within seven days
- air-conditioning systems (above 12kW) must be inspected every 5 years and an inspection report lodged onto the central EPC register for which a lodgement fee can be charged
An improved and redesigned EPC format will also be introduced from 6 April. Changes include a single energy efficiency graph, clear signposting to the Green Deal and which recommendations for energy efficiency improvements could be funded through this forthcoming innovative new financial mechanism.
As a result of the EPC changes, Domestic Energy Assessors (DEAs) will need to obtain a top-up qualification. If they fail to qualify by 6 April, they will not be able to continue practising as an energy assessor until they do. And if they fail to qualify by October 2012, they must re-take the full DEA qualification.
Probate – Executors and Estate Debts
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Did you know that when you administer someone’s estate as executor or administrator, you may be liable for claims from beneficiaries you were not aware of to debtors you did not know existed, when distributing the estate?
At Ziadies we can help you, the Executor/Administrator or, avoid such pitfalls. We can ensure that you are fully protected against claims from potential beneficiaries you were not aware of at the time of distribution of the estate, by arranging for statutory notices to be placed correctly.
Our experienced Solicitors will assist you through what can be a difficult process every step of the way, ensuring always that you are fully protected against any claims. In the unlikely event that litigation commences, we have the experience to advise you fully.
We can also help you administer the estate, by collecting in all the relevant information regarding the deceased’s assets and liabilities and thereafter ensuring that all the necessary steps are properly carried out: including payment of any inheritance tax liability, arrangements for the sale or transfer of any property, and the distribution of the estate.
Fees for Employment Tribunals
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The Ministry of Justice set out its options on fees for employment tribunals:
- The claimant would be charged an initial fee of between £150 and £250 to begin a claim, with an additional fee of between £250 and £1,250 if the claim went to a hearing.
- The claimant would pay a single fee of between £200 and £600 for a claim of up to £30,000 rising to £1750 for claims above this amount.
Under both options, there would be fee waivers for those on the lowest incomes. Justice minister Jonathan Djanogly said it was “not sustainable” for the taxpayer to cover the £84m cost of funding the tribunal system.
Deeds of Variation
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Post Death Deeds of Variation are a method by which the terms of a Will can be altered. They must be entered into within 2 years of the death in question. They are a very useful tax planning tool, however it is important not to rely on them to the detriment of preparing a Will as they may not be available indefinately.
A recent case highlights how the Courts view some aspects of Post Death Variations (“PDV”).
In (Wright v Garter [2011] EWHC 2881 {Ch}) the grandfather (Edward) & the father (Kieran) of a 3 year old boy called Rory, both died in quick succession, each without leaving a Will. Under the intestacy rules, Rory was entitled on the statutory trusts to part of his father’s estate (which included monies from the unadministered estate of his grandfather, Edward). It should be noted that on the statutory trusts Rory would become entitled to the capital and income at age 18.
There was no inheritance tax (“IHT”) payable on Edward Wright’s estate. Kieran Wright’s estate however, had to pay £89,000 in IHT.
Rory’s mother, Ellen, and her solicitors prepared a PDV firstly to avoid the inheritance tax “IHT” bill, and secondly to defer Rory’s entitlement to the age of 30 as Ellen felt that an 18 year old may not be able to properly control the sizeable income & capital, which would be around £750,000.
The PDV was submitted to the Court for approval. The Court was happy to approve the tax saving part of the variation, however it was not happy with that there was lack of separate representation of Rory’s interests - Ellen as one of Kieran Wright ‘s personal representatives put forward the PDV for approval and also acted as Rory’s litigation friend. Also no consideration had been given to the possibility of Rory failing to obtain a vested interest (e.g. if he died before the age of 30) and the interests of those entitled under those circumstances were also not represented.
Norris J explained that in these matters the Court had to be satisfied that the outcome was to the minor’s benefit (usually financial but not exclusively) and it was not enough to show that it does not do him any harm. Apart from the clear immediate benefit of an IHT saving of £89,000 there was a disadvantage in the proposed PDV trust which would lead to anniversary charges and exit charges. Also, the PDV deferred Rory’s entitlement for 12 years; a lengthy period. Ellen contended that the delay conferred a moral benefit in her son by preventing him from being in absolute control though able to access funds in the usual way, upon request when needed, subject to the approval of the trustees.
The Court found that the PDV was almost a resettlement rather than a variation. There was nothing in Rory’s character to suggest that he would not be able to deal with his entitlement till he reached the age of 30 and Rory had the right to have his independence as a young adult.
The Court approved a revised Variation in which:
The trustees included a professional, non- family member;
Rory became entitled to the income at 18;
Rory became entitled to 10% of the capital at 21;
Rory became entitled to the balance at 25; and
Default trusts providing for the eventuality of Rory not attaining a vested interest were included.
It is important to glean from this case the following and the private Client team at Ziadies Solicitors can advise you at every stage:
1. As an adult, it is very important to make a Will and provide for your family whatever your age;
2. The Court is happy to approve straightforward IHT saving measures and so it is important to obtain advice when dealing with an administration of an estate, especially if IHT is payable, as there may be a way of achieving a tax saving.
3. The Court will always ensure the interests of the young and vulnerable are duly protected.
4. Any trust prepared must be carefully thought out with all the eventualities considered and provided for and the interests of all involved separately represented, if appropriate.
5. It is acceptable to stagger the entitlement of a beneficiary so that they take control of funds over a period of time and not in one go - that may be a good lesson to learn when drafting inter vivos or will trusts.
Please call Louisa Calligas, Manal Fouad or Esteddar MacGreggor who will advise you in this regard.
