The event attracted a number of delegates from 18 different jurisdictions, and discussed a range of issues for philanthropy advisors. It was ably hosted by George King IV, Partner, MASECO Private Wealth; with Jo Bateson TEP, Partner, KPMG; Cath Dovey, Co-founder, Beacon Collaborative; and Alana Petraske, Partner, Withers Worldwide LLP, on the panel.
The current COVID-19 crisis and the deep and radical changes in society it has brought has prompted an increase in people wishing to give, and brought about a more important role for the philanthropy advisor. This means it is essential for advisors to have the right tools in place, and to be aware of clients’ shift in attitudes towards philanthropic giving, and what it involves.
Advisors need to feel comfortable about providing advice, especially while getting used to new ways of working. While much work can be done online, there are still concerns over physical actions, like signing cheques for clients, although on a positive note, many regulators have taken a pragmatic approach, recognising the need to work remotely.
A number of reasons were given for the increase in charitable giving. Clients want to be seen to be doing something, or they are using the increased ‘spare time’ to reflect on their place in society and how they could better themselves, with charitable giving being a solution. Many are acting in response to the current situation with a sense of urgency, and want to donate as quickly as possible.
During the first two weeks of the crisis, established infrastructure funds were able to utilise pre-existing networks and donate immediately and strategically. Subsequently there was a broader response, with non-regular clients and new donors emerging. Many of these had used the first few weeks to get their own affairs in order, and then wanted to act with speed. Anecdotal evidence showed that donors range from those with structures in place, to those who need preliminary hand-holding.
Even though the crisis is a generation-defining moment and clients want to donate quickly, several on the panel urged advisors to recommend clients should hold fire, and instead research their charities of interest, with a view to deploying their wealth strategically over a longer period (6 -12 months). It’s vital to manage clients’ anxiety and also assess the risk factors, as charities will be in distress for some time, and many will not survive at all. Reports show that in the UK, 40-70 per cent of charities may be dissolved in the next 12 months.
Another key, and indeed quite obvious issue is whether the client has sufficient money to give. The outbreak has brought out basic level survival instincts (such as the run on loo paper) and if someone feels under attack from the virus, they may not want to give, or feel they can’t.
The panel also suggested advisors be mindful of their own businesses, and review what they expect to happen in the next 6 months – 2 years. Points to consider include: where their work comes from, what will future working will look like, and what clients will be seeking from them. However, now is the perfect moment for advisors to be the philanthropy champion at work and integrate philanthropy into wealth planning.
The event ended with the panel highlighting what they felt were the key skills required for advisors in the industry:
Collaboration and the importance of building up a community which you can utilise and engage with.
Honesty regarding your skills, and being prepared to practice and train those who need further improvement.
To focus on a useful knowledge base, such as understanding what grant makers and other key players are doing.
Update 1 May 2020: HM Courts & Tribunal Service (HMCTS) met with STEP, the Law Society, SFE and ICAEW this week for its regular Probate Service meeting. The following updates were provided:
The combined form is timetabled for approximately two weeks’ time and a formal notification will be provided.
Partners who are Executors are now able to make online applications.
Trust corporations and others which are currently unable to apply online will be added to the process over the next couple of months.
HMRC intends to start sending IHT421 forms directly to the Probate Registry within 15 days of issue. A formal notification will follow when this has been implemented.
We have requested an additional meeting in the next ten days to discuss specific form issues with HMCTS and the Probate Registrar. Please contact us at firstname.lastname@example.org if you have issues that you would like to be reported.
HMCTS has also enquired whether firms are struggling to get the original wills to the Probate Registry during remote working. Please do let us know if this is the case.
Original blog: HMCTS has announced some interim operational arrangements that it will be making in light of the COVID-19 restrictions. The key changes will relate to the following areas:
acceptance of statements of truth in place of affidavits,
guidance on the signing/witnessing of renunciations and powers of attorney,
Statutory Instrument 2020 No 33: TheAdministration of Estates Act 1925(Fixed Net Sum) Order,
probate practitioner forms and electronic signatures.
Acceptance of statements of truth in place of affidavits
Statements of truth can be accepted in place of affidavits in the following circumstances:
identity of executor,
misrecital of date of will in codicil (if rectification not required under S20 Administration of Justice Act 1982),
Rule 41 – amendment of grant,
Rule 41 – revocation of grant,
Rules 30(1) (a),(b) and (c),
Rule 13 (knowledge of content of will),
Rule 14 (alterations in will),
Rule 15 (attempted revocation of will).
HMCTS is awaiting further advice in relation to the acceptance of statements of truth for use in applications that specify evidence must be submitted by affidavit.
Guidance on the signing/witnessing of renunciations and powers of attorney
Documents including renunciations and powers of attorney that are required to be signed as a deed before a disinterested witness may be effected in the usual way using any method of signing/witnessing that can be achieved under the safe distancing measures currently specified by the government. HMCTS will not look beyond any document that is submitted that is signed and witnessed in the usual way, including the use of electronic signatures.
Statutory Instrument 2020 No 33: TheAdministration of Estates Act 1925(Fixed Net Sum) Order
With effect from 6 February 2020 the fixed net sum for spouses and civil partners of persons who have died after that date without leaving a will has been increased to GBP270,000. If you have been issued with a grant of Letters of Administration since 6 February 2020 and you believe the entitlement to the estate may have been affected by this, you are advised not to administer the estate and, if you are a personal applicant, to seek legal advice.
Probate practitioner forms and electronic signatures
HMCTS has received queries from practitioners in respect of whether the new forms are for use by practitioners and personal applicants. These forms will become a combined form for use by both at the end of the transitional period and will be uploaded as a combined form on the gov.uk website.
For clarity, the links to all the relevant paper forms for probate professional practitioners only to use are:
Please note: All forms for practitioner use contain the following statement in the title for probate professional practitioners only. If this statement is not included, the application is only for the use of personal applicants at this stage.
‘HMCTS advises that any new work which is undertaken should now be completed by either using the new paper application forms (electronic signatures including typed signatures will be accepted) or you could alternatively apply online. HMCTS is actively encouraging the use of online applications as this enables us to maintain the service whilst many of our staff are also remote working.’
This week we publish a short report reflecting on the use of PCRT (Professional Conduct in Relation to Taxation) by the professional bodies since the Standards for Tax Planning were added in March 2017.
STEP became a signatory to PCRT in 2011 following its inception 25 years ago by the other UK tax bodies. PCRT is reviewed annually and updated by representatives of each of the seven bodies (along with STEP, these are AAT, ACCA, ATT, CIOT, ICAEW and ICAS).
In its present form, PCRT sets outs the Fundamental Principles and Standards for Tax Planning behaviours required by all our full, associate, affiliate and student members when they are advising on UK tax (regardless of the jurisdiction in which they may be based).
While 2017 saw the Standards introduced, the version issued on 1 March 2019 was the first major restructuring in 25 years to take account of feedback from our members. The updated help sheets provide guidance on how members can apply PCRT to their day to day professional activities, exercise their professional judgement and resist any undue pressure they may receive from clients or employers to act in an unethical manner. The help sheets focus on
submission of tax information and tax filings,
dealing with errors,
request for data by HMRC,
members personal tax affairs.
Application of PCRT
STEP’s Code of Professional Conduct sets out our core standards, and PCRT supplements this. It does not stand in isolation, and any member who is found to be in breach of PCRT will likely have breached our core Code, other membership requirements, plus any regulatory requirements that members may have to abide by.
PCRT does not only affect members in professional practice. Its Fundamental Principles and Standards of Tax Planning apply to all members who practise in tax, including employees attending to the tax affairs of an employer or client, those dealing with their own tax or that of their family, friends, charities, etc, whether or not for payment, and those working in HMRC or other public sector bodies or government departments.
Tax agents who are not members of any of the signatory bodies are not ‘off the hook’ either. All agents, including those with no professional qualifications at all, are covered by HMRC’s own Standards for Tax Agents published on 4 January 2018, which incorporates the principles of PCRT.
The eagle-eyed among you will have noticed HMRC’s current call for evidence on ‘Raising standards in the tax advice market’. STEP will be responding to this call for evidence by its closing date of 28 May 2020.
How do members use PCRT?
At its simplest level, PCRT is intended to guide and assist members, enabling them to ensure that they undertake work effectively and appropriately. In practice it is being used as a reference point for professional standards, helping members make informed choices.
PCRT helps members demonstrate the required standards to clients and employers, and assist with explaining why some planning arrangements are not suitable and cannot be undertaken, helping members to support their colleagues and fellow professionals in making correct decisions, and showing a commitment to ethical practice.
As professionals, members serve their clients’ interests, but also uphold the reputation of the tax profession, and the reputation of STEP as a society, all of which take account of the wider public interest. PCRT is a powerful tool in helping us retain public confidence in the work of members.
In these various ways, PCRT appears to be working successfully in supporting members, their clients and the wider community by describing the standards of behaviour that clients can expect when seeking advice on their tax affairs.
How do the professional bodies use PCRT?
PCRT has been widely promoted and debated by the professional bodies across our member communications, and its Fundamental Principles and Standards for Tax Planning play an essential role in promoting ethical conduct among our members.
STEP, along with each of the professional bodies, has entered into a memorandum of understanding with HMRC, allowing HMRC to report to us any alleged misconduct by any of our members. Where such a report is received, we will use the PCRT Fundamental Principles and Standards of Tax Planning to assess whether an appropriate professional approach has been adopted to determine whether we need to commence an investigation under our own Disciplinary Rules.
Finally, HMRC’s report, ‘Measuring tax gaps 2019’ shows a significant reduction in the tax gap attributable to tax avoidance. While there is no direct evidence, each body is of the firm belief that the changes to PCRT have helped to support this reduction. Any questions should be sent to Sarah Manuel, STEP’s Professional Standards Manager at email@example.com.
Following a query raised on the Trusts Discussion Forum, STEP’s UK Technical Committee has been considering the capital gains tax consequences of a deed of variation of a will in circumstances where the asset which is the subject of the variation has already been disposed of by the original beneficiary.
The specific issue raised was whether the original beneficiary should be taxed on the disposal of the asset or whether the capital gains tax deeming provisions relating to deeds of variation have the effect that the donee under the deed of variation should be treated as having disposed of the asset.
Part of the uncertainty had been caused by the apparent inconsistency of two paragraphs in HMRC’s Capital Gains Tax Manual: CG31600 and CG31630.
The committee has been in correspondence with HMRC in order to clarify this point. HMRC has confirmed that:
It is possible to have a valid deed of variation in relation to an asset which has already been disposed of by the original beneficiary.
The effect of the deeming in s.62(6) TCGA is that the donee under the deed of variation is treated as having acquired the asset from the personal representatives and must therefore also be deemed to be the person who disposed of the asset.
If the original beneficiary and/or the donee have already filed tax returns for the relevant tax year they will be able to amend their tax returns and/or make a claim for relief from overpaid tax.
HMRC has amended paragraph CG31600 of itsCGT Manualto reflect its view.
Robin Vos TEP, Chair of STEP’s UK Technical Committee.
Entries are open for the STEP Private Client Awards 2020/21 from 3 February until the new date of 26 June. The Awards are widely acknowledged as being the premier event in the private client industry calendar. Winning an Award is a very clear and recognised hallmark of excellence.
How then, do you go about winning an Award? Mary Duke, TEP, Chair of the Presiding Judges, gives us her top tips based on her personal experience as a nominee, winner, judge and now as Chair of the Judging Panel.
You have to be in it to win it
There can sometimes be a perception that the Awards are only for larger firms or for the usual London suspects. However, the judges have clear instructions to make allowance for smaller entrants and to take cultural differences into account when considering international entries. Last year’s entrants and winners were the most international yet. Entries from all sizes and types of firm are therefore welcome. Strong entries will always attract attention from the judges, regardless of their size or regional origins.
Enter the right category
It is a constant surprise to the judges how many firms enter the wrong category. One submission even began with the bold statement: ‘We are a leading [another category entirely] firm…’. Read the category criteria carefully, and if you think the judges might have difficulty understanding why you are applying for a particular category, help them by explaining your business better.
Put yourself in the mind of the judges
My number-one tip, when writing your submission, is to imagine yourself as one of the judges.
Be aware that most of the judges will not know most of the applicants. If they do, then all the better – judges are encouraged to bring their personal knowledge to the process – but for the most part, judges will be relying heavily on the submission. So even if you think you are the best-known firm in the world, make your submission count.
Understand the judging process
There are three phases to the judging process.
The Shortlist Phase – First, submissions for the legal categories often receive a high number of entrants resulting in the category being split into large and mid-size firm groups. This is why entrants in these categories are asked to submit the number of fee earners in their team and in the firm. The definition of fee earners can be viewed on the FAQs page of the website. Then the categories are assigned to judging groups and each judge will have to review up to 100 submissions, each of up to 1,100 words. Judges have to submit a scorecard against the category’s criteria and write a narrative (minimum 50 words) to support their outcome for each entrant. That is 220,000 words of reading, 1,000 scores to give out, and at least 10,000 words to write. It is an incredible amount of work.
The Panel of Experts – After the shortlist is announced, the entrants for each category are submitted to a panel of experts. These individuals are chosen for their ability to provide independent and knowledgeable insights into the entrants and the field of their work. (But they are not direct competitors in the category.) A list of the panel of experts is available on the awards site. The reports of the Panel of Experts are considered as recommendations only and do not constitute a formal vote.
The finalist stage – The finalists’ entries and the panel of experts’ recommendations are provided to the full panel of judges for this critical decision phase. Prior to meeting for final deliberations, each judge is required to submit their own report on each individual submission indicating which entrant they believe should win the category. The judges then meet to deliberate and make a final decision for each award.
This is a thoughtful and transparent process involving a good deal of debate and discussion. At times, the discussion results in judges shifting their views. There is no consideration of how many tables a firm might purchase at the awards dinner or the size of the contribution an entrant may have made to the officially supported charity. In fact, there is no way for the judges to know these things based on the timing of the decision process. Likewise, there is no consideration given to whether a firm won in the preceding year. Judges with conflicts or whose firm has entered a submission are recused from related categories.
Answer the questions
It is the first rule of exam-technique we should all have learned at school, but every year I am amazed at submissions that fail to answer the question. There are five criteria for each award. Each of the criteria is weighted equally and we score each on a scale of one to five. So answer each of the questions individually. Don’t allocate too much space to one category to the disadvantage of another.
Further, make sure that you clearly answer each of the criteria in turn. Don’t use jargon or abbreviations that are not in common usage. Remember, the panel of judges is made up of a diverse group of practitioners from differing fields of expertise.
The most important thing to avoid is a long single narrative. Even if it addresses all the criteria, judges aren’t going to thank you for having to read it several times in order to extract and mark each one. Make the judges’ lives easier and they are likely to mark you more highly.
Don’t waste word-count
You have 1,100 words. Make them all count. So many submissions waste words. Précis rigorously. Then do so again.
Clear, succinct language is appreciated.
Avoid the marketing spiel!
You will be judged by fellow senior industry professionals who can spot puffery and hyperbole from a long way off.
Most of the work in our industry is advisory. The ability to communicate clearly with clients is crucial to this. So, demonstrate your ability to give clear advice, with a clear and well-written submission. If your marketing team is superb, then by all means use them. The judges’ experience, though, is that submissions written by those at the coal-face often read more convincingly.
Pay attention to spelling and grammar and beware unnecessary adverbs and superlatives.
Big numbers (and names) are irrelevant
Many submissions make great play of the financial value of their clients or cases. Others seek reflected glory in acting for big names. Yet both of these have almost no effect on the judges. Tell us what makes your case unusual, complex or novel. Don’t simply name-drop celebrity connections.
Provide evidence; don’t merely assert
Most criteria ask you to ‘demonstrate’ or ‘provide evidence’. Yet many submissions assert things – ‘We are the leading firm providing a superlative level of client-service and exceptional satisfaction’ – without any evidence to back this up.
What will go down well is an evidence-based entry that gives clear examples of what the firm has done over the past year to make it stand out from the crowd.
Entries should be particularly careful about unguarded assertions. ‘We are the only firm that can…’ or ‘We are the largest firm which…’ are particularly dangerous assertions – especially where some of the judges might work for a competitor and dispute whether this is true.
Tell us something unusual
A good answer for each of the criteria might get you shortlisted. But if you want to win, you will need to stand out.
Tell the judges something different, something unusual, something genuinely innovative. Think forward to the awards ceremony and the announcement of the winner. When the celebrity-host says: ‘The judges were particularly impressed by…’, what one facet of your submission will the judges have chosen?
The judges are both curious and cynical in equal measure. They will check what you say in your submission against what you say on your website and other sources of information. Glaring inconsistencies tend to result in entries receiving short shrift.
Remember the Awards are ‘ … of the Year’
Your firm will obviously be very good at what it does, but the Awards are intended to highlight those that have achieved particular success over the past year. Make sure you are rigorous in only referring to evidence from 1 May 2019 to 30 April 2020. General statements about historic successes will waste words and not score any marks.
….and finally, good luck!
The judges look forward to having a bigger job this year, with many well-written submissions to choose from!
Mary Duke, TEP, is an independent advisor to families.
The UK government laid a statutory instrument on 15 January 2020, which increases the net sum that a surviving spouse or civil partner is entitled to receive in England and Wales where a person dies intestate leaving issue (children).
The new legacy has been increased from GBP250,000 to GBP270,000, and will come into force on 6 February. The formal title is the Administration of Estates Act 1925 (Fixed Net Sum) Order 2020.
Under the rules of intestacy, if there are no children, then the spouse or civil partner will inherit the whole estate. However, if there are children, then the spouse or civil partner will be entitled to all of the deceased’s personal property, the first GBP270,000 of the estate and 50 per cent of the remainder, leaving 50 per cent to be divided equally between the children.
How was the calculation made?
The government reviews the amount of the statutory legacy every five years and increases it in line with the Consumer Price Index.
When calculating the increase, the Lord Chancellor followed the standard methodology in Schedule 1A to the 1925 Act (following the amendments brought in by the Inheritance and Trustees’ Powers Act 2014). This involved calculating and then applying the change in the Consumer Price Index (CPI) from the ‘base month’ (October 2014) to the ‘current month’ – the most recent CPI figure available at the time of fixing the sum (November 2019, published by the Office for National Statistics on 18 December 2019). This equated to an increase of 8.1 per cent of the GBP250,000 sum, with the figure then rounded to the nearest thousand (as required by the Act), which resulted in the increase of GBP20,000.
STEP welcomes the increase to the fixed legacy, although we would caution that it is prudent not to rely on the rules of intestacy, and to make and review a will regularly.
I’ve learned much in my first year as Chair of STEP England and Wales. The most impressive thing I’ve seen remains something that I already knew existed; the passion and dedication of our members.
The E&W Committee are looking at how we can increase support at a local level. Getting new members involved remains the lifeblood of the Society. Those attending STEP’s global Branch Chairs’ Assembly recently will have heard the inspirational Tiger de Souza, Director of Volunteering at The National Trust, giving us an insight into increasing volunteer participation. I’m sure many will be implementing the lessons we learned from him.
2019 has been another year of significant policy developments. The planned increase in probate fees didn’t happen. This was due, in large part, to work done by STEP’s policy and communications teams and E&W former Chair Rita Bhargava TEP, whose persuasive arguments convinced the government to think again.
Many of our UK Practice Committee members’ terms are coming to an end shortly. We’re delighted that they have joined the new UK Advisory Group, which will replace the current committee. This will allow E&W to retain access to their collective knowledge, experience and capability for drafting the articles, practice notes and briefings that many of us have referenced over the years.
The UK Technical Committee, has continued to keep pace with changes to tax and legislation proposed by the government. Led by Robin Vos TEP, this committee has responded to a number of consultations on behalf of STEP. We’re lucky to have them overseeing the interests of our members and the public at large.
E&W Committee has been looking at embedding our standards for tax planning into our everyday practice. STEP’s Professional Standards committee are developing a toolkit that will enable you to demonstrate your compliance with these high standards. The first annual report, Professional Conduct in Relation to Tax, has been drafted and will be published imminently.
In September, Professor Stephen Mayson published his interim report regarding the review of legal services regulation in England and Wales. STEP has considered the proposals and Amanda Simmonds TEP and Rita Bhargava will be responding to the consultation on our behalf.
It’s been a good year for STEP, with 2020 shaping up with more exciting things to come. My thanks to Mark Walley and the STEP staff for all their hard work, as well as to the members of the E&W Committee. Most of all, thanks to all the Society’s members and volunteers throughout E&W, without whom there would be no STEP. I look forward to meeting as many of you as I can throughout 2020.
STEP is aware that many members are looking for clarification as to how GDPR should be interpreted in the context of trusts and estates.
STEP’s Data Protection Working Group has made submissions to, and had discussions with, the Information Commissioner’s Office on this topic, and intends to publish guidance early next year (most likely in January or February 2020).
The topics covered by the guidance will include:
how to apply tests such as ‘number of staff’ and ‘turnover’ in the trusts and estates context;
the distinction between data processors and data controllers;
the extent to which GDPR applies to trustees and personal representatives acting in a non-professional capacity;
the legal basis on which trustees and personal representatives can process special category data;
the circumstances in which trustees and personal representatives should issue privacy notices to beneficiaries; and
the obligations on trustees and personal representatives when responding to subject access requests.
The Data Protection Working Group intends to add to this guidance in due course, including setting out views on matters such as the treatment of bare trusts and of attorneys and deputies.
Edward Hayes, Chair of STEP Data Protection Working Group
Updated 24 March 2020: HM Courts & Tribunals Service (HMCTS) has launched new standard application forms for professional practitioners.
Three of the grant of representation forms have been redesigned for the professional sector. These are the PA1A (applying for grant of letters of administration), PA1P (applying for a grant of probate) and PA8A (applying for a caveat). These forms need to be completed in place of the Statement of Truth, and can be accessed from Probate forms and guidance.
Updated 14 February 2020: HM Courts & Tribunals Service (HMCTS) is now issuing new grants within two weeks of all professional online or paper applications for England and Wales.
HMCTS has requested feedback from professionals who have used the new online system. It has registered approximately 1,000 online applications since the launch and is urging other professionals to sign up.
STEP has relayed the message to HMCTS that some emails and calls are still going unanswered.
Updated 2 December 2019: STEP met HMCTS this week, together with The Law Society, and the Institute of Chartered Accountants in England and Wales.
HMTCS provided the following update on the Probate Service:
For personal applications HMCTS is now issuing grants in less than four weeks.
For professional applications grants are being issued within two to three weeks.
HMCTS issued 11,390 grants in the first two weeks of November.
HMCTS has identified that 16 per cent of stops are caused by a pending IHT421 and 11 per cent of stops are due to a missing death certificate.
The new online system will help to identify the reasons for other stops in due course.
HMCTS is promoting the use of its online system and is keen to see increased professional uptake. It is also looking at introducing a new paper form in the new year. Once introduced there will a transitional period to enable firms to implement.
The online service for Welsh applications will be implemented in the new year.
From 2 December 2019 the CTSC customer service centre will be open from 8am-8pm Monday-Friday and from 8am-2pm on Saturday.
I passed a busy few days in Sao Paulo last week at the STEP LatAm Conference, where I was representing STEP, together with our Chair, Simon Morgan TEP. The regional committee meeting and first networking reception set the tone for meeting many of our professional members, and it was a great pleasure to meet so many new faces.
The conference agenda ranged from the thought leadership of basketball legend Rick Fox on engaging with the new high net worths, and author and journalist Carlos A Montaner on populism in the new world order, through to practical case-study break-out sessions.
Among the highlights was the presentation of our second annual STEP LatAm Thesis Writing Competition to Enrique Martinez Guzman (pictured above, right) for his entry under the topic, ‘Tax consequences of transferring domestic and foreign property to a foreign structure’. Enrique will surely be a name to watch in the years ahead.
I was delighted to join Dayra Berbey de Rojas TEP to present the STEP Founder’s Award to two treasured members of the STEP family, John Lawrence TEP of the Bahamas, and Rosa Restrepo TEP of Panama.
In a show of support for the Bahamas during its recovery from Hurricane Dorian, members of the STEP LatAm Conference Committee presented a donation for relief efforts to Bahamas Minister of Financial Services Elsworth Johnson, raised from speakers who had generously waived their fees.
The final gala dinner was the perfect end to the knowledge exchange and networking, and made me reflect what a fabulous event this is and how well it supports the aims and mission of STEP in the region. It is also one that goes from strength to strength as membership in the region grows.
Our thanks to co-Chairs Ana Claudia Utumi TEP and Norberto Martins TEP, our sponsors, and the whole organising committee. I hope to see many of you again in Argentina next year. Will there be even more than this year’s 430 delegates next time? I would not be surprised.