Despite opposition from the Law Society, fees payable to the
Court to issue proceedings in respect of civil disputes went up considerably
this year.
Friday 22 May 2015
The rising price of Access to Justice and how to try to avoid It
Monday 16 March 2015
The impact to you of the latest divorce case of Wyatt v Vince which hit the headlines last week
Always finalise your financial agreements following a
divorce by way of a Consent or final Order to prevent your ex-spouse pursuing
you in later years for a share of any after acquired assets and to prevent the
expense of pursuing or contesting the proceedings.
In the recent Supreme Court case of Wyatt v Vince [2015] UKSC 14 the ex-wife pursued
her claim for a financial settlement some 18 years after the Decree Absolute
had been granted ending their marriage. Mr. Vince’s business subsequently took
off and he became a multi-millionaire.
Mr. Vince made an
application to the court to summarily strike out Ms. Wyatt’s claim on the basis
that there were no reasonable grounds for bringing the application; and that
the application was an abuse of the court's process or was otherwise likely to
obstruct the just disposal of the proceedings.
Ms. Wyatt made an
application for Mr. Vince to fund her legal costs.
On 14 December
2012 a deputy High Court judge dismissed Mr. Vince's strike-out application and
ordered him to make interim periodical payments in respect of legal costs. Mr.
Vince appealed, successfully, to the Court of Appeal to have the deputy judge's
orders set aside. She appealed to the Supreme Court.
The Supreme Court
upheld her appeal. The Judges held that “when an ex-spouse applies for a
financial order, the court has a duty under section 25(1) of the Matrimonial
Causes Act 1973 ("the 1973 Act") to determine that application having
regard to all the circumstances, including the eight matters set out in
subsection (2); this assessment is not apt for summary determination.”
On this basis,
that it was a proper application to be heard substantively by the court, Mr.
Vince also failed in his argument that it was an abuse of process.
Subsequently, as Ms. Wyatt was unable to reasonably secure legal services by
any other means and it would be unreasonable to expect her solicitors to
continue to act without payment until the determination of her substantive
application the test for interim periodical payments in respect of legal costs
was made out and the original order upheld.
This does not
mean that Ms. Wyatt will automatically achieve a final settlement from Mr.
Vince but that the court must consider the application as it would any other,
taking into consideration the s.25 factors but it does provide a timely
reminder to all divorcees who don't have financial orders in place that they
should do so to avoid later claims based on wealth acquired after the divorce.
If you feel you
are not protected please contact Andie Brown head of our family team for
professional advice “clear and simple” on 01524-386500
Friday 6 March 2015
The Deed of Variation - A Tax Loophole or Not?
There has been a bit of a furore on the Solicitors for the
Elderly discussion forum recently following press articles about Deeds of
Variation and particularly the Daily Mail’s reference to it as a ‘controversial
tax loophole’. Although a deed of
variation can save tax in certain situations, it is basically a device for a
beneficiary to record the gift of some or all of his or her interest in a
deceased’s estate in favour of another individual or a charity or a trust. It will be used where the situation after
someone’s death is not covered by the terms of the deceased’s will or intestacy
and for all sorts of reasons, not necessarily related to tax, it is desirable
to change the terms of the deceased’s will.
The deed of variation sets out how the beneficiary is
rearranging or redirecting his or her interest in the estate. It can be preferable to the beneficiary’s
other option of ‘disclaiming’ the gift (where they simply refuse to accept it)
as it means that the original beneficiary can choose who (or what) receives
it.
A deed of variation can be helpful where the first to die of
an unmarried couple has failed to make a will and the cohabitee would otherwise
lose everything to the beneficiaries who were entitled under the intestacy
rules. In these circumstances, the beneficiaries
of the intestacy would each have to come to the decision to ‘do the right
thing’ as they cannot be made to gift their interest (the deed of variation has
to be voluntarily) and the alternative is likely to be a difficult and probably
expensive claim against the estate under the 1975 Inheritance Act for the
family and dependants.
It can also be helpful to make sense of the current
inheritance tax regime where couples now have a transferable nil rate
band. Prior to the Finance Act of 2006
it was necessary for married couples and civil partners with an estate over the
value of one nil rate band to pass some of it to a discretionary trust (if the
survivor was likely to need it) or outright to their children or relatives (if
the survivor did not) on the first death.
This was an artificial arrangement to avoid a higher inheritance tax
bill when the survivor of them died and thankfully it is no longer needed. However, where a couple have not updated
their wills a deed of variation can be useful to pass the estate on to the survivor
of them as the couple would have wished if only the tax regime had allowed them
to.
The variation is essentially a gift by the original beneficiary
under the will or intestacy. If it is
completed within 2 years of the deceased’s death, provisions in the Inheritance
Tax Act 1984 and Taxation of Chargeable Gains Act 1992 mean that although the
beneficiary is making a gift of his or her interest, that beneficiary will not
be responsible for any tax payable as a result of the gift and instead the
terms are ‘read back’ into the will.
In relation to inheritance tax, the reading back provisions
mean that the gift is considered as part of the distribution of the deceased’s
estate overall. So, if the total amount
transferred to chargeable beneficiaries exceeds the deceased’s nil rate band
then tax will be payable, but otherwise it will not.
It would be rather unusual for a variation to trigger an
inheritance tax charge, but it depends on the reasons for doing the variation
in the first place. In cases where the
original beneficiary is re-organising the estate to make provision for
dependants and relatives, inheritance tax considerations may be secondary to
the needs of these individuals.
I should add, for completeness, that it is only capital
gains and inheritance tax that is covered by these reading back
provisions. For income tax purposes, the
variation is only effective from the date the deed itself is executed. Generally, the original beneficiary is
assessed on any income produced up to the date of the variation and the new
beneficiary after that.
Hopefully, most people will not require a deed of variation
as they will have an up to date will in place that reflects the current
situation and includes everyone or everything that should be included. It is obviously very important to keep
checking the terms of your wills (or if you haven’t got one, to make one) to
ensure it is up to date. The deed of
variation can be extremely useful and it will always be possible to make one,
but whether or not the favourable rules for capital gains and inheritance tax
will apply to the variation remains to be seen.
A change in the tax law could remove the advantages of the reading back
provisions, so that although an estate can always be varied (or a beneficiary’s
interest disclaimed) the ‘tax loophole’ is removed.
For further information on any aspect of this article please contact Rebecca Lauder, a Partner in our Lancaster office on 01524 386500 or rl@bsglaw.co.uk
Monday 19 January 2015
Negotiating a Commercial Lease
Commercial leases are complex lengthy documents with even short term
lets running to multiple pages. So, what
are the important issues?
This depends
on whether you are a landlord or tenant however, remember you both want to
create the lease and make it work. There
is undoubted pressure on landlords due to the current economic climate and the
surplus of empty properties so it is increasingly important for a lease to be
attractive to both parties.
Short term tenancies can be desirable. Landlords want their properties occupied so a
short lease ensures, at least for a while, that the property is making money
not costing money and where the tenant is a start-up business there is opportunity
to build a business in a particular location but without risky long term
financial commitment. This may also
appeal to an older business where, for example, a new office is being
established.
Whether a long or short term has been agreed, a break clause can be
a useful negotiating tool. A break
clause in a commercial lease allows it to be ended before expiry of the
term. These clauses are usually subject
to service of a notice and conditions, e.g.: the rent being paid up to date
although it is becoming increasingly common for break clauses to be subject only to the service of a notice. Break clauses can be particularly important
to a start-up where the viability and success of the business is untested. A break clause allows a tenant (whether a
start-up or established business) to terminate the lease should difficulties
arise.
Rent under commercial leases has traditionally been payable on a
quarterly basis. Does it suit both
parties better for rent to be payable monthly allowing a landlord more
frequent, regular income and a tenant more manageable rent demands? Would it work for the rent to be paid like
Council Tax, i.e.: over 10 months of the year?
This leaves the tenant with, in effect, two ‘rent free’ months in
January and February, which are often financially difficult times of the
year.
The economic down turn and the ending of empty property rate relief
presents tenants with greater opportunities to negotiate rent free periods at
the outset of the lease or to be used as arguments against rent increases where
a review is due. To offset requests for
rent free periods, a landlord may be prepared to tidy up a property before a new
lease starts as it may be a cheaper alternative.
Landlords should aim to keep their tenants and their properties
occupied so if a business is struggling but still viable then flexibility is
key. Would variation of certain clauses
in the lease ease pressure on the tenant and keep the property occupied and
generating income?
Repairing obligations are also important. A landlord will usually want a tenant to be
responsible for all repairs but the tenant, particularly in a short let, will
usually want its responsibility for repairs to be restricted or for internal
repairs only.
If you need any help or assistance in this area then contact the
Commercial team based in our Lancaster Office on 01524 386500 or email info@bsglaw.co.uk
Wednesday 5 November 2014
MMR - Six Months On
Recent research has revealed that six months after its introduction, UK home buyers hold mixed feelings over the Mortgage Market Review (MMR), which was designed to halt reckless lending.
Potential borrowers
were left feeling frustrated at thein-depth questioning process now employed by
lenders although the vast majority of respondents felt that MMR was on the
whole a ‘good thing for the economy and housing market’, as it would help to
ensure a sensible approach to borrowing.
Myhomemove asked over
100 of its home moving clients to share their experiences of applying for a
mortgage before and after the introduction of MMR in April 2014. Topping the
list of findings was the frustration felt by post-MMR applicants at the level
and depth of questions now asked by lenders.
Despite misgivings and since the introduction of
MMR, however, successful first time applications resulting in a mortgage offer
increased by 156% although the ease of obtaining a mortgage fell by 16%
Doug Crawford, CEO of
myhomemove said, "Although people are frustrated at the level of
information required by lenders, our survey shows that the majority see the
stricter lending criteria as a good thing for the economy and housing market;
citing it as a way of ensuring people don’t overstretch themselves, or face the
horrible situation of having their home repossessed.”
Although it seems
that the new MMR process can feel personal and intrusive, it does seem to
suggest that it is robust and productive for many home movers, as the number of
repeat applications fell substantially and successful first-time applications
soared. BSG as a conveyancing provider, hopes the new system will assist with
increasing the transactional process seeing less time spent waiting for a
mortgage offer which can ultimately be one of the largest delays in the
process.
Wednesday 8 October 2014
Cancer Care Cross Bay Walk 2014
As part of BSG's commitment to supporting
charity the staff and partners raised £560.00 through their sponsored walk
across Morecambe Bay and office cake sale. Obviously the latter was a
requirement after the former!!
Wednesday 2 July 2014
Terms and Conditions-Consumer Contracts Regulations 2013
On Friday 13 June the Consumer Contracts (Information,
Cancellation and Additional Charges) Regulations 2013 came into force.
The Regulations regulate most contracts made between a
“trader” and a “consumer”. They will therefore apply to a wide range of
contracts made between businesses and their customers (as consumers) but
whether they apply or not will depend upon the nature of the customer and the
circumstances in which the contract is made.
The Regulations have increased the time a consumer has to
cancel their contract with you and there are serious consequences of not
complying with the new Regulations. For example it is a criminal offence to
fail to inform consumers of the right to cancel, punishable by a fine. Also, if
you did not give the customer the time limit and procedures for cancelling, the
cancellation period is extended and you will not be able to enforce the
contract until you either give the consumer the relevant information or a
considerable period has elapsed. This would mean for example that, you would
not be able to issue Court proceedings under the contract for payment until the
cancellation period has elapsed but the contract will not be void so your
customer will still be able to enforce it against you.
We would therefore advise that businesses
instruct the firm to update their paperwork including their terms of
Business to ensure that they fully comply. If you would like us to assist you
with this process, please contact Keith Parr, Partner, on 01772 253841, kgp@bsglaw.co.uk or by post.
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