Execution Formalities

Wills: temporary change in law to allow witnessing by video

The Government has confirmed that it will introduce legislation to allow for the witnessing of wills by video conferencing. It is now known that the legislation will be put before Parliament in September and will have retrospective effect to 31 January 2020. Guidance has been issued which includes the step-by-step process that should be followed when witnessing by video link and example scenarios where it would be appropriate to use video witnessing. The type of video conferencing or device used is not important as long as the person making the will and their two witnesses each have a clear line of sight of the writing of the signature. Witnessing pre-recorded videos will not be permissible and instead the witnesses must see the will being signed in real time. Despite changes in laws in other jurisdictions and calls for the temporary legislation to go further, it has been confirmed that neither electronic signatures nor counterpart wills will be introduced.

HM Land Registry to accept electronic signatures

HM Land Registry has announced that it will start accepting witnessed electronic signatures, with a view to then ensuring that digital signatures (specifically Qualified Electronic Signatures) can be used. The decision follows frequent queries from customers during the Covid 19 pandemic regarding whether the Land Registry would be accepting electronic signatures as opposed to signing documents, for example deeds, with a pen (a ‘wet-ink’ signature).

Tax Policy

OTS call for evidence on capital gains tax

On 14 July 2020 the Office of Tax Simplification (at the request of the Chancellor) published a call for evidence on CGT. High level comments on CGT principles are requested by 10 August 2020 with the deadline for more detailed comments on the technical and practical operation of CGT being 12 October 2020. There are 42 questions in the primary section of the document under headings covering structural CGT issues, issues commonly affecting individual taxpayers, issues commonly affecting business owners and investors and the administration of CGT. A particular focus is on allowances, exemptions, reliefs and losses, as well as comparing how gains (short and long-term) are taxed as compared to income. The scoping document suggests its ostensible purpose is to identify which aspects of CGT are particularly complex and hard to get right or where the present rules distort behaviour, rather than to look for ways of increasing CGT.

Tax Litigation

Alternative dispute resolution in tax disputes

On 15 June 2020 the First-tier Tribunal published a practice statement on the use of alternative dispute resolution (ADR) in tax disputes once an appeal has been made to the tribunal. The practice statement concerns only applications for ADR after an appeal has been made but notes that ADR can be used before this; in such cases, taxpayers should discuss ADR with HMRC directly. In addition, the practice statement stresses that using ADR does not affect statutory appeal rights or time limits. Echoing the First-tier Tribunal's statement, HMRC has also updated its guidance on applying ADR to reflect that ADR can now be applied at any stage of an enquiry and at any stage of tribunal proceedings.

Transparency

Fifth Money Laundering Directive and the trust register

The UK government has published the outcome of its technical consultation on the implementation of the Fifth Money Laundering Directive and its impact on trust registration. Several useful concessions have been made, in line with feedback received. In particular, offshore trustees entering into a business relationship in the UK will not have to register the trust on the Trust Register unless there is at least one UK-resident trustee. The original regulations required registration of offshore trusts even if there were no UK trustee, which could have deterred trustees of offshore trusts outside the European Economic Area from seeking professional advice in the UK. In addition the final regulations significantly expand the categories of trust that will not need to be registered. It appears, however, that the government has rejected suggestions that bare trusts should also be exempt from registration.

The Government has set a deadline of 10 March 2022 for existing trusts to register on the TRS, or to update their records if they have already done so. A 30-day deadline will be imposed for new trust registrations and updates, similar to the reporting deadlines imposed on companies for reporting details of their persons with significant control. However, the government has conceded that it would not be appropriate to require trusts created by will to be registered within 30 days of the date of death as, in most cases, the administration of the estate operates over a much longer timescale: hence the exemption of will trusts.

The regulations to implement the provisions have now been laid before Parliament.

HMRC's online Trust Registration Service

The new updating function in HMRC's online Trust Registration Service allows trustees to change the lead trustee, other trustees, beneficiaries or settlor of an already-registered trust and to close a trust. Further functionality, including in relation to change of agent, is awaited.

Germany – keeping original DAC6 reporting deadlines

Germany has unexpectedly decided not to extend reporting deadlines for DAC6 on mandatory disclosure of cross-border tax planning arrangements. Many other EU Member States, including Belgium, Luxembourg, the Netherlands and the UK have already announced they will take up the option of deferring implementation by six months because of the coronavirus pandemic.

For further information on DAC6, see our article 'Summer 2020 Transparency Update'.

Disguised remuneration loan charge

House of Commons briefing and spreading of outstanding loan balances

A detailed briefing on the 2019 disguised remuneration loan charge has been published by the House of Commons' research department. It discusses the legislation, its consideration by the House and the debate as to whether HMRC's approach has been fair, in particular its retrospective nature and the operation of the settlement opportunity.

HMRC's recent Agent Update reports that the online loan charge form has been updated so that an election can be made to spread outstanding disguised remuneration loan balances evenly across the three years 2018/19, 2019/20 and 2020/21.