The Scottish Government is reviewing the current financial limits regarding Prior Rights of a surviving spouse or civil partner on intestacy and Confirmation to small estates.
Scottish Borders Council has voted to increase what it charges for the purchase of a burial plot for 2011-12. The cost will rise from £284 to £450. The reason given was that Scottish Borders Council was charging significantly less than the average charged by Scottish local authorities.
A reminder that furnished holiday lettings may be affected by three major taxation changes. Two changes apply from April 2011. The first of these is that the profit or loss from a FHL in an EEA country other than the UK (European Economic Area is the EU countries plus Iceland, Liechtenstein and Norway) has to be calculated separately from a profit or loss arising from UK holiday lettings. Profits and losses from outwith the EEA also have to be calculated separately. Also from 2011 it will no longer be possible to set a loss made from FHL properties in the UK or overseas against other income to generate a tax repayment. As from April 2012 the periods that a property may be let to qualify for the FHL tax reliefs are to be extended. These changes are likely to mean that some FHL businesses will no longer be profitable.
Tax reliefs for charities and donors were worth £3.34bn in 2010/11,according to HM Revenue & Customs.
Figures published last week show charities received £2.56bn in tax relief, up from £2.48bn 2009/10.
The figures include £1.1bn in Gift Aid, up from £1.03bn in the previous year, and £1.16bn in business rate relief, up from £1.14bn in the previous year. Reliefs for donors rose to £780m from £740m. The largest personal reliefs were inheritance tax relief, up to £340m from £320m in the previous year, and higher-rate relief on Gift Aid, up to £350m from £330m.
VAT reliefs were estimated to be worth £200m, but this figure is rounded to the nearest £50m and has remained unchanged since 2003. Third Sector online 5 May 2011
The Irish Government’s battle to retain a low corporation tax rate was given a boost last week, after the Dutch finance minister backed Ireland’s position. The comments will help bolster Ireland’s fight against German and French pressure to increase its 12.5% corporation tax rate in exchange for better terms on the €85bn bailout loans from the EU and IMF.
During an official visit by President Mary McAleese to the Netherlands, Dutch finance minister Jan Kees De Jager said that countries should be able to retain sovereignty on tax matters. Irish Independent 3 May 2011
Case considering duties owed by the parties to a joint venture to each other. Thomas Barr entered into a joint venture with Hawkhill to purchase and resell Omne House (an office building at Riverside Park in Irvine). Hawkhill, which was controlled by a Mr Gilchrist, sold Omne house to Fearann of which Mr Gilchrist was a director along with his wife (who also owned all of the shares). Fearann was not a party to the joint venture.
In response to Mr Barr’s claims for payment of half of the sale proceeds, Mr Gilchrist argued that Hawkhill had various outstanding claims for payment in respect of other developments (which were the subject of separate court proceedings) and the property had been transferred in an attempt to improve its position in respect of these outstanding claims.
In granting summary decree (for payment of half of the sale proceeds), Lord Hodge found that Hawkhill had acted in breach of trust. He confirmed that a joint venture is a species of partnership and that the sale of the property to Fearann in order to improve its position in relation to the other outstanding claims amounted to a breach of fiduciary duty.
The full judgement is available from Scottish Courts here.
All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.
Complicated case in which the Liquidator of the Letham Grange Development Company sought reduction of a security over the Letham Grange resort near Arbroath. The case involves a number of companies all controlled by a Mr Liu and his family.
The grounds for challenge
The Liquidator argued that the holder of the security (Foxworth) had (1) not acquired the rights under the security in good faith and for value and (2) the security was void as it was not in the correct form.
Good faith and value
Prior to this case the Liquidator had challenged a disposition by Letham Grange in favour of Nova Scotia Limited on the basis that it was a gratuitous alienation, an unfair preference (both in terms of the Insolvency Act 1976) and a fraudulent preference at common law. The subjects which had been purchased by Letham Grange for £2,105,000 were sold to Nova Scotia for only £248,100. The Liquidator had previously obtained a decree reducing the disposition (effectively by default when Nova Scotia failed to appear at a proof).
However, in the present proceedings Mr Liu argued that the price contained in the disposition was not the full consideration for the subjects as the price had been reduced to take account of loans which Mr Liu and his family had made to Letham Grange in order to finance the purchase. Foxworth then assumed liability to repay the loans to the family and Nova Scotia granted the standard security over the property in favour of Foxworth.
After consideration of the evidence and an assessment of the credibility of the witnesses, Lord Glennie found that the sale had been for adequate consideration and there had not been a gratuitous alienation. There had been loans by the family in favour of Letham to finance the original purchase and, although Foxworth had imputed knowledge of the facts pertaining to the sale to Nova Scotia (through Mr Liu who was in control of both companies), it did not have knowledge of any fact rendering the grant of the standard security by Nova Scotia a breach of an obligation on it affecting the property.
Form of the Security
The Liquidator argued that the security, which had been drafted by Mr Liu himself, was not valid pointing to the fact that although the deed referred to a separate personal bond (per a Form B security under the Conveyancing and Feudal Reform (Scotland) Act 1970) it failed to specify the date of the personal bond and did not include anything allowing the personal bond to be identified. Also, although the deed contained the rate of interest to be applied (per a Form A security under the 1970 Act), the personal bond did not.
However, Lord Glennie agreed with the argument that it was acceptable to rely on extraneous evidence to identify the personal bond approving the arguments put on behalf of Mr Liu to the effect that, although a standard security must comply with one of the statutory forms contained in the 1970 Act, it is sufficient compliance that the deed complies “as closely as may be” and some latitude may be allowed.
Lord Glennie noted that in effect the security had been a hybrid between Form A and Form B but found there was no difficulty in a security granted in hybrid form.
The full judgement is available from Scottish Courts here.
(See Inner House decision here and appeal to the Supreme court here).
All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.
Appeal by Hallam against the adoption of the Edinburgh City Local Plan. Hallam argued that the Council had rejected reporters’ recommendations as to sites at Newcraighall North and Newcraighall East without giving adequate reasons for doing so. The Council’s development company EDI was involved in both developments and the reporters had recommended reducing the number of housing units allocated to each site. To make up the structure plan’s requirement for additional housing in the urban fringe, the reporters recommended increasing the number of units at two other sites (one of which was owned by Hallam).
Lord Malcolm allowed the appeal and granted an order quashing the Edinburgh City Local Plan in so far as it includes the allocation of housing units at both Newcraighall North and Newcraighall East. In coming to this decision Lord Malcolm referred to the decision in Oxford Diocesan Board of Finance v West Oxfordshire District Council and another (1998):
“Even in cases involving planning judgement, the planning authority must give adequate and intelligible reasons for its decision. It must be apparent that the authority fully and
properly considered the substantial points raised by the reporters. It must deal with the matters relevant to the merits of the decision and give sufficient reasons for departing from the reporters’ conclusions. The obligation to deal with the matter thoroughly, conscientiously, and fairly is enhanced when (as here) the council is both a promoter of a site and the ultimate decision-maker. It would not be sufficient for a planning authority merely to recite a series of assertions. While what is needed will vary from case to case and depend on the context and precise circumstances, fair and specific consideration of the report is required.”
The full judgement is available from Scottish Courts here.
All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.
Over the next few months HM Revenue & Customs is to rewrite all of its guidance for charities.
In the case HMRC v Parissis, the First-tier Tax Tribunal held that a tax inspector can require an individual to hand over a document that he does not possess. The taxpayer’s only defence is to prove that the third party who holds the document has refused a request to supply it.
