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

Compliance – ECJ ruling on public beneficial ownership registers

The Court of Justice of the European Union ("ECJ") has ruled that measures in the EU Fifth Anti-Money Laundering Directive ("5AMLD") requiring EU Member States to give the public unlimited access to their central registers of companies' beneficial owners are invalid on privacy and data protection grounds. This is an interesting (although, due to Brexit, not binding) decision for the UK, in view of our register of people with significant control ("PSC register") and the register of overseas entities ("ROE"), both maintained by Companies House. The Trust Register is not open to the public save where a "legitimate interest" (narrowly defined) can be demonstrated. As a result of the case, the Luxembourg beneficial ownership registry took its register offline immediately; and the Netherlands suspended public access to its own register the following day. In terms of potential impact in the UK, the decision has no immediate impact on UK law but could lead to challenges. In particular, on the basis that public access to the above UK registers infringes Article 8 (right to respect for private and family life) of the European Convention on Human Rights and breaches the UK General Data Protection Regulation. Further, the decision may have implications for the commitments made by British Overseas Territories and Crown Dependencies to establish publicly available registers of beneficial ownership, and it will be interesting to see if these go ahead as planned. Public access to company ownership registers must be restricted, says CJEU | STEP 

Tax policy – Finance (No. 2) Bill 2022

The Finance (No. 2) Bill 2022 was published on 22 November implementing measures announced at the 2022 Autumn Statement on 17 November. The government has stated that any remaining tax measures needed ahead of April 2023 will be included in the "main Spring Finance Bill 2023" which will follow the spring Budget. The clauses in the Finance (No. 2) Bill 2022 of interest to private client practitioners are:

  • income tax - basic rate limit and personal allowance for tax years 2026-27 and 2027-28 (clause 5);
  • income tax - threshold at which additional rate is charged (clause 6);
  • income tax - dividend nil-rate threshold (clause 7);
  • capital gains tax - annual exempt amount (clause 8); and
  • inheritance tax - rate bands for tax years 2026-27 and 2027-28 (clause 9).

Finance (No. 2) Bill 2022 published: private client tax measures | Practical Law (thomsonreuters.com)

Contentious estates – testamentary capacity case

In McQuaid v McQuaid, 2022 NICh 18), a Will executed by a 73-year-old with terminal cancer and displaying "intermittent" bouts of confusion has been upheld after being challenged on testamentary capacity grounds. The testator was discharged to palliative care shortly after making his Will and died a few weeks' later. The solicitor did not seek a medical opinion on the testator's testamentary capacity but made a contemporaneous attendance note. The court found that the deceased met the so-called "golden rule" as there was no suggestion of dementia or any other "red flags" to doubt testamentary capacity. There was therefore no requirement for the solicitor to seek any medical opinion. This is another case where the court has been reluctant to criticise experienced solicitors who take reasonable steps to satisfy themselves of their client's capacity. Will upheld in Northern Ireland high court, despite hospitalised testator's 'confusion' | STEP

Probate – grant application waiting times

It has come to our attention that online probate users are being advised by HM Courts and Tribunals that the expected timeframe for probate application is "up to 16 weeks" and users are asked not to contact HMCTS "until 16 weeks have elapsed". This timeframe is longer than that published by the Ministry of Justice in their data for the period from January to March 2022; this recorded the average waiting time for a grant of probate as eight weeks overall. Family Court Statistics Quarterly: January to March 2022 - GOV.UK (www.gov.uk)

Contentious trusts and estates – Court Funds Office interest rates

As from 18 November, in response to the increase in the Bank of England base rate on 3rd November, the Court Funds Office ("CFO") rates of interest payable to clients has changed to the following:

  • Special Account – increases from 2.25% to 3.00%; and
  • Basic Account – increases from 1.688% to 2.25%.

The CFO provides banking and investment services for money paid into court and deals with the assets of people who are unable to manage their own financial affairs. The above interest rates also apply to pecuniary legacies under a Will that are paid late. Increased interest rate on the Court Funds Office special and basic accounts - GOV.UK (www.gov.uk); Interest rates for private client practitioners | Practical Law (thomsonreuters.com)