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

Tax Day

Our summary of the main "Tax Day" announcements on 30 November is here but the key point to note is that there will be no major changes to the inheritance tax and capital gains tax ("CGT") regimes for the time being, despite the recommendations of the Office of Tax Simplification. Now would therefore seem a good time for people to make use of the current systems whilst they can, as reform (particularly to CGT) is still likely in future. EPrivateClient - article (paminsight.com)

Excepted Estates rules 

The changes to the reporting requirements for excepted estates, as set out in the Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2020 will come into force on 1 January 2022. As a result of the changes, a greater category of estates will qualify as "excepted" and will no longer have to submit an IHT205 form. Instead, the online probate system will ask practitioners to confirm: the net and gross value of the estate for IHT purposes; the net qualifying value of the estate; and whether the nil-rate band is being claimed. Updates will be made to the digital probate service from 1-12 January 2022 to facilitate these changes. Users are asked to avoid submitting probate applications for affected excepted estates during this period. Updated paper forms will be live from 1 January 2022. HM Courts and Tribunals Service: Updates to MyHMCTS about excepted estates for probate practitioners | Practical Law (thomsonreuters.com)

Remote witnessing of Wills

A survey by the Law Society has concluded that only a small proportion of solicitors are using the remote witnessing rules for Wills. Of the 95% of respondents who drafted Wills during the lockdowns, only 14% used remote witnessing. The rules were brought in on a temporary basis as a result of the pandemic and will expire after January 2022, unless the Ministry of Justice decides to extend them. Remote witnessing of wills is a useful option but not a game-changer | The Law Society

Trust Register and trusts wound up before 1 September 2021

HMRC has confirmed that non-taxable trusts established on or after 6 October 2020, but which closed before the Trust Registration Service allowed them to register on 1 September 2021, will still need to register and then immediately close the trust record. Trust Registration Service: HMRC confirms that trusts established on or after 6 October 2020 but subsequently wound up need to register | Practical Law (thomsonreuters.com)

Capacity to consent to sexual relations

A Local Authority v JB [2021] UKSC 52 is a Supreme Court decision relating to capacity to consent to engage in sexual relations. Although the judgement specifically relates to local authorities' responsibilities in respect of an autistic person in social care, the case confirms the Court of Appeal's widening of the existing capacity test and is an important one for those advising on capacity in the context of sexual relations. Supreme Court upholds Court of Appeal ruling on capacity to "consent to" sexual relations | Practical Law (thomsonreuters.com)

Entrepreneurs' Relief

In Assem Allam v HMRC [2021] UKUT 291 (TCC), the Upper Tribunal ("UT") has ruled that the taxpayer's personal company was not a trading company for Entrepreneur's Relief (now business asset disposal relief) because its activities were, to a substantial extent, not trading activities. The UT's guidance on the "substantial" trading test for ER will affect trading companies holding valuable investments which require little physical activity. HMRC's guidance suggests that activities should be taken to be "substantial" if they amount to more than 20% of the activities of a company. The UT refused to endorse this numerical threshold but it is hoped that HMRC will retain it as it provides a level of certainty to taxpayers and their advisers. The case also has relevance for the "transactions in securities" rules and business investment relief. First-tier Tribunal's decision on entrepreneurs' relief, "transactions in securities" rules and business investment relief upheld (Upper Tribunal) | Practical Law (thomsonreuters.com)