A summary of key legal updates in the Private Client sector over the past week is as follows.
Remittance basis and collateral in respect of relevant debts
HMRC has made a controversial change to its Residence, Domicile and Remittance Basis Manual ("RDRM") regarding collateral in respect of a "relevant debt". This relates to HMRC's previously stated view on the quantification (for remittance basis purposes) of foreign income and gains which are used as collateral for loans where the full value of the loan is remitted to the UK. The RDRM previously provided that the remittance would be capped at the level of the loan; however, this has now been changed so that, if the value of the collateral is higher, the taxable remittance is at the level of the collateral. However, another section of the RDRM still says the opposite. We understand that professional bodies are seeking clarification from HMRC. www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35270
HMRC published updated guidance on 18 June relating to applications for refunds of overpaid Stamp Duty Land Tax ("SDLT"). This is relevant in respect of the higher SDLT rates for additional properties (where a taxpayer can apply for a refund of the higher rate element if their main home is sold/ gifted within three years) and the 2% SDLT surcharge for non-UK residents (where a refund claim can be made within two years if the taxpayer meets certain residence requirements after the purchase). The new guidance states that to process refunds quickly, HMRC will make the refund without checking eligibility; however, they have up to nine months to undertake a compliance check. If the refund is later found to be incorrectly paid, the taxpayer must pay it back with interest. Stamp Duty Land Tax online and paper returns - GOV.UK (www.gov.uk)
Divorce and death of a spouse before adjudication
Hasan v Ul-Hasan (Deceased) & Anor (Rev1)  EWHC 1791 (Fam) is an example of where Private Client and Family law overlap. The case relates to spouses who had obtained a divorce in Pakistan but the wife later alleged that large sums of money were not disclosed in those proceedings. The wife brought proceedings under Part III Matrimonial and Family Proceedings Act 1984 to obtain a financial remedy following an overseas divorce. The husband died before any adjudication was made and the issue was whether the claim could be continued against his estate. This situation has never arisen before in a Part III claim, although there are judgments on similar facts under Part II of the Matrimonial Causes Act 1973 and similar authorities relating to the Inheritance (Provision for Family and Dependants) Act 1975. The High Court dismissed the wife's claim against her late ex-husband's estate but recognised that there are inconsistencies in the case law and further leave to appeal should be granted to the wife if necessary by "a leapfrog application" to the UK Supreme Court as "there is a point of law of general public importance involved". Financial provision following divorce does not survive husband's death, rules EWHC | STEP
Remote hearings and Covid-19
The Law Society has published a response to the two-week rapid consultation on remote hearings in the family courts and the Court of Protection launched on 10 June 2021. In its response, the Law Society outlined instances where remote hearings may be unsuitable or inappropriate, including where a party has limited access to technology or requires an intermediary or translator. Whilst welcoming remote hearings as the default for simple administrative hearings, the Law Society commented that they may not be appropriate for final hearings particularly where there are complex issues, or the cross-examination of lay witnesses is required. COVID-19: Law Society warns of consequences on access to justice in the long-term by default use of remote hearings in the family courts or Court of Protection | Practical Law (thomsonreuters.com)