If you think your firm may require a private client locum solicitor or partner, short or long term, or private client consultancy input please contact me at james@legalknowledgescotland.com

The Court of Session has refused to rectify a deed made to dismantle a nil-rate band trust created under a will.  The deed fell into the so-called ‘Frankland Trap’.

“[51]      In the present case the trustees intended to create a right by executing the deed of appointment. They had no intention of delaying the creation of that right as they were unaware of any benefit in doing so.  The deed of appointment expressed accurately the intention of the trustees at the date when it was executed, since their intention was to create a right to the trust fund absolutely in favour of Lord Nickson. The legal result of the deed being executed was that the trust funds were made available to him, exactly as the trustees had intended. Applying the approach identified by Lord Macfadyen of identifying what the grantor intended by way of the creation, transfer, variation or renunciation of rights and then asking whether the legal effect of the language used in the deed achieved the result that the grantor intended to bring about, leads to the conclusion that there is nothing to rectify in the deed of appointment.  The fact that in bringing about their intended legal result the trustees fell into the “Frankland Trap”, and failed to achieve the underlying purpose of the whole exercise, seems to me to be a different matter and not within the scope of rectification.”

The full case report can be found here.

Interesting case where the First-tier Tribunal held that the rights of a deceased person and their family to privacy were outweighed by the public interest in fairness of judicial proceedings and the proper collection of taxes. 

The full decision can be found here.

If you think your firm may require a private client locum solicitor, short or long term, or private client consultancy input please contact me at james@legalknowledgescotland.com

A relatively rare case involving “facility and circumvention” and “undue influence”.

Background.

“In this action Alex, suing in his capacity as executor nominate under the will, seeks reduction of the two dispositions and the deed of gift on the ground that they were impetrated by means of facility and circumvention and also by undue influence exercised over Mrs Matossian by Berj and Richard.  The broad proposition advanced on his behalf is that by virtue of the three transactions of 25 April 2007 Mrs Matossian gave away basically all her assets in contradiction of a contemporaneous will, to Berj and Richard for no return except a capital gains tax liability at a time when she was clearly seriously ill and without the assistance of independent advice.”

The Court of Session ruled that that the two sons had used their “dominant influence” and the trust that arose from the relationship to gain a “material benefit” to the prejudice of their late mother.

“In light of these findings I conclude that when Mrs Matossian signed the three deeds on 25 April 2007 she was subject to facility and circumvention as well as undue influence at the instance of both Berj and Richard.  The circumstances of the signing of the three deeds are eloquent of both facility and circumvention and undue influence, the requirements of each of which I have set out in full above.  I am satisfied that on 25 April 2007 Mrs Matossian was suffering from weakness of mind, that acts of circumvention by Berj and Richard impetrated the execution of the three deeds and that she suffered lesion as a result.  I infer circumvention from the whole circumstances of the execution of the deeds, as narrated above.  Lesion consists in her having divested herself of her entire heritable estate for no consideration.  I reject any evidence from Richard, Berj and Mr Couston to the contrary.  So far as undue influence is concerned, I am satisfied that all the requirements, as set out above, have been established by the evidence.  There was a relationship that created a dominant influence (sons and mother), confidence and trust arose from that relationship, a material benefit was given to the prejudice of the grantor and there was an absence of independent advice and assistance.”

A Bill for an Act of the Scottish Parliament to amend the Land and Buildings Transaction Tax (Scotland) Act 2013 to make provision about an additional amount of tax to be chargeable in respect of certain transactions relating to dwellings.

Bill as introduced can be found here.

Explanatory guidance can be found here.

Scottish Parliament progress update can be found here.

The May 2015 edition of Private Client Scotland is now available.  The ‘preview edition’ published in November 2014 can be found here. If you would like to subscribe to Private Client Scotland please email me at james@legalknowledgescotland.com

“In this edition the editorial looks at two manifesto pledges concerning the tax status of ‘non doms’ and a new inheritance tax relief and also the launch of the two new Scottish taxes. There is also an article on Revenue Scotland’s LBTT opinions policy.  Included in ‘Case reviews’ is the Judgement of Sheriff McCormick on the appointment of an attorney by an executor. ‘Professional updates’ include updates on the ‘Certification of Death (Scotland) Act’ and the Scottish Law Commission’s annual report. Lastly the ‘News items’ section includes stories that range from the average cost of a funeral to the introduction of ‘guardians’ in England and Wales for missing persons.”

The May 2015 edition of Private Client Scotland is now available.  The ‘preview edition’ published in November 2014 can be found here. 

“In this edition the editorial looks at two manifesto pledges concerning the tax status of ‘non doms’ and a new inheritance tax relief and also the launch of the two new Scottish taxes. There is also an article on Revenue Scotland’s LBTT opinions policy.

Included in ‘Case reviews’ is the Judgement of Sheriff McCormick on the appointment of an attorney by an executor. ‘Professional updates’ include updates on the ‘Certification of Death (Scotland) Act’ and the Scottish Law Commission’s annual report. Lastly the ‘News items’ section includes stories that range from the average cost of a funeral to the introduction of ‘guardians’ in England and Wales for missing persons.”

If you would like to subscribe to Private Client Scotland please email me at james@legalknowledgescotland.com

1. Reform of income tax rates and bands. One option would be to create 10%, 20%, 30%, 40% and 50% income tax rates and bands. This would ensure a more progressive system of income tax and in particular removes the large gap between the 20% and 40% income tax rate and band. There was a similar issue with Stamp Duty Land Tax until the recent reforms by both Westminster and Holyrood.
2. Devolve control of the approval of charitable tax status to Revenue Scotland and OSCR.  A Scottish charity should not have to deal with both OSCR and HMRC when OSCR could easily deal with these tax matters.  Revenue Scotland have already done something similar with the two new Scottish taxes.  Registers Scotland are involved with the collection of the Land and Buildings Transaction Tax and SEPA is involved the collection of the Scottish Landfill Tax.
3. Reduce the rate of VAT charged on home repairs and improvements to 5%.  HM Treasury already allows this in the Isle of Man.
4. Allow Police Scotland and the Scottish Fire and Rescue Service to recover VAT.  This is another example of Scottish institutions being penalised by the UK Government when they wish to do things differently.  A previous example was the withholding of Attendance Allowance funding when the Scottish Parliament introduced Free Personal and Nursing Care.
5. Ensure that UK institutions must take Scots law and practice into consideration when dealing with international matters.  For example the United Nations Convention on the rights of persons with disabilities.  This directly impacts on our Adults with Incapacity legislation.
6. Devolve control of stamp duty on shares to the Scottish Parliament.  The Scottish Government could then abolish stamp duty charged on the sale of shares of Scottish registered companies.
7. Devolve control, complete control, of the Crown Estate, air passenger duty and aggregates levy by the end of 2015.  Control of income tax should also be devolved completely.  The new ‘shared’ income tax gives the Scottish Parliament almost no worthwhile control over income tax. All funds from fines, forfeitures and fixed penalties imposed by our courts and tribunals as well as sums recovered under the Proceeds of Crime legislation should also remain in Scotland.
8. Devolve control of inheritance tax to the Scottish Parliament.  It makes no sense for succession law to be controlled by the Scottish Parliament but not the main succession tax. This would also ensure that the reform of Scottish succession law can be done in a joined up manner.  Another reason to do this is tax simplification both in Scotland and the rest of the UK.  The applicable forms and guidance would no longer need to include explanations of the Scottish and the rest of the UKs laws of succession.  This argument can just as easily be made with a number of transport and environmental taxes.
9. The Scottish GAAR (General AntI-Avoidance Rule) which goes further than its UK counterpart as it targets artificial, not merely abusive schemes, should be made to apply throughout the UK.
10. Devolve control of the Annual Tax on Enveloped Dwellings to the Scottish Parliament so that the Scottish Parliament can abolish it.  It is not likely to be needed in Scotland now that we have a Scottish Land and Buildings Transaction Tax.  If the underlying issue were to become a problem in Scotland we can easily create our own anti-avoidance provision.