A summary of key legal updates for the Private Client sector over the past week is as follows.  

Finance Bill 2022

The Finance Bill 2022 will be published on 4 November to give effect to relevant announcements in next week's Autumn Budget. https://questions-statements.parliament.uk/written-statements/detail/2021-10-19/HCWS330

LPA consultation

The Ministry of Justice ("MOJ") consultation on Modernising Lasting Powers of Attorney ("LPAs") closed on 13 October and Wedlake Bell have submitted a response. Professional bodies have been publishing their own feedback and the general theme of safeguarding comes through strongly, as emphasised in our own response. The Law Society questions how the MOJ proposals will work for those who cannot access a digital service (such as those in care homes or people with learning difficulties) who will still need to make an LPA via a paper process. STEP gives strong opposition to the proposal that witnesses could be dispensed with or replaced with new safeguards that perform the same function, saying that all signatures to an LPA should remain witnessed by independent witnesses. STEP also proposes indemnity bond insurance for all attorneys in case of malfeasance or fraud or similar wrongdoing. Society voices 'genuine concerns' about power of attorney reforms | News | Law Gazette; Professional bodies insist on strong safeguards for LPAs in England and Wales | STEP

1975 Act and CFAs

Hirachand v Hirachand, 2021 EWCA Civ 1498 is a recent Court of Appeal ruling which confirms that the success fee element of conditional fee agreements ("CFAs") can be recovered as part of an award under the Inheritance (Provision for Family and Dependants) Act 1975 ("the 1975 Act"). The original proceedings were brought by the deceased's estranged adult daughter who had been excluded from the deceased's (her father's) Will. The sole beneficiary of the estate was the deceased's wife (the claimant's mother). The daughter's claim for reasonable financial provision (which related to her ongoing healthcare costs for a pre-existing mental health condition) was successful and she was awarded £138,918 from the estate (which was worth £1.2m). In determining the award, the judge included the sum of £16,750 as a contribution towards her liability to pay a CFA success fee. The mother appealed the decision in respect of the CFA contribution, but was unsuccessful. This is the first such decision from a higher court and it will be binding on lower courts, and could incentivise private client lawyers to take on 1975 Act cases under CFAs where this is the only means by which the claimant could pursue their claim. EWCA confirms that 1975 Act awards can include conditional fee agreement uplifts | STEP

Reliance on HMRC guidance

STEP has published a Guidance Note on HMRC's reliance statement (published in March 2009) following recent recommendations made by the IFS Tax Law Review Committee urging HMRC to update this statement to incorporate undertakings that a change in HMRC's position regarding published guidance should lead to that guidance being changed immediately and publicised; and to include a policy whereby changes to HMRC published guidance should apply only for the future and not retrospectively. STEP's recommendation to members is to "refer to the guidance as evidence of HMRC’s likely practice and of the construction of legislation that it is likely to adopt but remain alert to the fact that, except in rare circumstances and through the highly uncertain and expensive process of establishing a legitimate expectation in judicial review proceedings, they cannot rely on HMRC’s guidance in law." step-guidance-on-hmrc-reliance-statement-14.10.21.pdf

Trust statistics – number of trusts still in decline

The total number of trusts making self-assessment returns has continued to decline, falling by 6% between April 2019 and April 2020, according to figures from HMRC. However total trust and estate income in the 2019/20 tax year is broadly stable when compared with recent years. Trusts statistics October 2021 - GOV.UK (www.gov.uk); EPrivateClient - article (paminsight.com)