EW probate delays: September update

Emily Deane TEPSTEP met HM Courts & Tribunals Service (HMCTS) this week, together with The Law Society, the Institute of Chartered Accountants in England and Wales, and Solicitors for the Elderly, to obtain an update on the delays and disruption to the Probate Service in England and Wales.

HMCTS gave us the following update on work undertaken since our last meeting on 27 June.

Timescales

HMCTS is still receiving 700-800 applications a day from personal applicants and professional applicants.

It has processed 98,000 grants since April and has a backlog of applications from March.

It has increased staffing levels by 20 per cent.

It is striving to get back to its pre-March level of service, which was a 28-day turnaround for personal applicants and ten days for professional applicants.

It acknowledges that performance has not been acceptable but anticipates that delays will reduce over the coming weeks.

Stops/errors

HMCTS estimates that approximately 20 per cent of applications from professionals, and 25 per cent of personal applications need to be stopped for a variety of reasons. The most frequent problems are thought to be:

  • the IHT421 form has not yet been received;
  • not all executors have been accounted for;
  • the will has not been included;
  • names are spelt incorrectly; and
  • the forms have not been correctly signed.

The new online system (see below) will be able to more accurately identify the reasons for the stops and it is hoped this feedback will lead to fewer delays and a more streamlined process.

It is worth noting that when an application is stopped it takes some time for the registry to reconnect the paperwork. 

New system

The new online application system for professionals is due to be introduced by the end of October. Users will be able to register their organisation on the website, with no need for an invitation from the registry.

Each organisation will have a single login, to include all those using the service. Organisations will be able to suspend or terminate a person’s access if they are no longer using it.

Once registered, details of applications will be uploaded within 24 hours.

All of the main types of application will be available at launch, although some of the less frequently-used applications make take longer.

Key messages

HMCTS is encouraging registry staff to communicate via email, rather than post.

The digital pilot will be transferred in early October and launched by the end of the month.

HMCTS’ eventual aim is to digitally interact with HMRC on future applications, to reduce the delays and complications of paper trails.

The implementation of the new probate fee regime is not high on the political agenda, due to continued disruption and the prorogation of parliament.

HMCTS continues to apologise for poor service.

 

Emily Deane TEP, STEP Technical Counsel

The Informed Trustee – one year on

Julie HutchisonIt’s difficult to believe that it’s been a whole year since the launch of The Informed Trustee, STEP’s innovative course designed to equip current and aspiring trustees with the knowledge needed to be successful charity board members, reflects editor in chief Julie Hutchison TEP.

As we hoped at the outset, the course has supported a greater proportion of women and younger people to take on a trustee role. Our figures* show that 59 per cent of The Informed Trustee intake are women, and the students over the last year had an average age of 49-50. Both of these figures show a significant difference to those in the 2017 Taken on Trust report, published by the Charity Commission and others, which records trustees as 64 per cent male, with an average age of 60-62. This shows the course is supporting positive change in charity boardrooms. As well as individual registrations, a number of charities seeking to support groups of trustees have made enquiries for block bookings . One year on, and almost 100 students later, it’s good to see this happening.

The move to greater inclusivity is significant. Board diversity is not just a box-ticking exercise. The goal is to improve the nature and quality of charity board decision-making. A diverse board is better able to minimise ‘group think,’ and a range of voices is more likely to challenge established norms.

Another factor that marks out the course from others is the multi-jurisdiction choice. This is not just a course for those from one part of the United Kingdom. We have a writing team of 17 charity specialists from Scotland, Northern Ireland, England and Wales, so that charity trustees, and those aspiring to be trustees, can find relevant course content wherever they’re based. It also reflects the cross-border reality of life in the UK, something I personally experience as a Scot who is on the finance committee of a charity in the north of England. Students can choose content based on their chosen jurisdiction; or view all for a complete picture across the jurisdictions if they prefer. The multiple-choice test at the end only shows questions from the jurisdiction selected.

With chapters covering communications and data, and a personal development pathway for trustees, the course offers a modern take on information needed by trustees in the 21st century, as well as core components on trustee responsibilities, accounts, risk management and fundraising rules, among others.

The decision to run the course online is also very significant. Students are free to dip in and out, or view course content on different devices, within the 12 month access period.

We have received some positive feedback from students. One wrote:

‘I feel it’s a valuable course for new trustees to gain knowledge, and for more experienced trustees as a refresh to ensure they are up-to-date. I would also say it is helpful for charity CEOs to access the course, so they too have an understanding of charity governance.’

Menai Owen-Jones, Trustee of ACEVO and CEO of The Pituitary Foundation.

On a personal note, launching The Informed Trustee has marked the moment in my working life when I moved from five to four days with Aberdeen Standard Capital, whose flexibility has been an enormous help as I created time for my ‘Friday life’ with The Informed Trustee and other projects. I’d also like to thank the writers from the various firms involved, for their support in creating the course content: BDO, Brodies, Chiene & Tait, Crowe, Edwards & Co, Finegan Gibson, Geldards, Hewitsons, Lindsays, Mills & Reeve, Moore Stephens, Shepherd + Wedderburn, Turcan Connell and Wrigleys.

Looking ahead, the course content is about to go through its 2019 refresh and update.  Public expectations of charities remain high; those trustees with The Informed Trustee under their belt will be better prepared for what lies ahead.

*Statistics taken from 88 per cent of students in year one of the course, who made a disclosure.

Julie Hutchison TEP is Founding Editor, The Informed Trustee

What’s happening in England and Wales?

Denese MolyneuxMy tenure as Chair of STEP’s England and Wales Regional Committee began in January and I would like to thank Rita Bhargava TEP for being such a hard act to follow. January also heralded the arrival of STEP’s new Chief Executive, Mark Walley. Mark has been quick to get his feet under the table and has ambitions to move STEP forward while keeping the organisation true to both its mission and vision.

The last England and Wales committee meeting pinpointed the areas that the committee felt warranted the most attention: raising the profile of TEPs in the public eye; education, career development and networking; educating professionals; and influencing government/policymakers. We are working on a plan to support and input into further work in these areas over the next year.

As detailed in Rita Bhargava’s blog in December, much has been done in recent years to raise the profile of TEPs in the public eye.  STEP’s Communications Team continue their sterling work with the ‘Talk to a TEP’ campaign and public-facing website, advisingfamilies.org, which continues to receive over 1,000 TEP searches a month.

The mammoth job of upgrading the STEP website is underway. The update will include a new member area, and a full site redesign, which should lead to big improvements and help you find exactly what you are looking for. The new site should be with us by January 2020.

The probate fees issue rumbles on. Rita Bhargava and STEP’s Policy Team have been leading the charge. Despite their best efforts, the government was, until very recently, pushing ahead with the Order. With recent political events, however, this is all looking a little less certain than before, and seems unlikely to come in much before the end of the year, and there is some speculation that, due to its unpopularity, it might not happen at all…  You can keep up with developments on the STEP Blog as they happen.

The EU Fifth Anti-Money Laundering Directive (5AMLD) is under consultation by the Treasury.  It is to the credit of our technical and policy team that they have pulled together such a comprehensive response to this consultation, and in addition have organised two roundtables with a number of senior industry practitioners to discuss the impact of the Directive in the UK. Watch this space for updates as they happen.

A hearing for the All-Party Parliamentary Group on Inheritance and Intergenerational Fairness was attended by a delegation from STEP in April. This APPG has held a series of hearings, some of which have helped inform recent recommendations in this area from the Office of Tax Simplification (see blog). We are hoping for more fundamental changes in this area, however, and look forward to recommendations from the APPG later this year.

And our Professional Development Team has a number of plans for the next year, not least the introduction of more flexible diplomas, enabling practitioners to tailor their STEP Diploma to better suit their specialisms.

Since joining the England and Wales committee six years ago, I have been constantly in awe of the amount of work that goes on behind the scenes, undertaken by committee members and the Head Office team, a fraction of which I have reported above. It is a pleasure and a privilege to work alongside so many dedicated professionals.

I look forward to updating you with further blog postings during my time as chair.

Denese Molyneux TEP, Chair, STEP England and Wales Regional Committee

OTS inheritance tax review, second report: A welcome start, but could go further

The UK Office of Tax Simplification (OTS) has published a second report following its ‘Inheritance Tax Review: Call for Evidence’ published in April 2018.

The first part of the review focused on inheritance tax (IHT) forms, administration and guidance and the OTS published their response in November 2018.

The second part of the review focuses on various areas of the IHT regime and how they interact with one another. The report, published on 5 July 2019, contains three areas of recommendations for the simplification of inheritance tax: lifetime gifts; interactions with capital gains tax (CGT); and businesses and farms in relation to agricultural property relief (APR) and business property relief (BPR).

STEP is very keen to see the inheritance tax regime simplified due to complexities in the current system, so any proposed simplification is to be welcomed. However, we are disappointed to note that there are no recommendations in relation to the nil-rate band, the residence nil-rate band or the treatment of trusts. We believe that the government could expand upon these recommendations and look at a wholesale change in policy towards IHT.

The summary of recommendations on page 13-14 are as follows.

Key area 1: Lifetime gifts

Gift exemptions package

1. The government should, as a package:

  • replace the annual gift exemption and the exemption for gifts in consideration of marriage or civil partnership with an overall personal gifts allowance
  • consider the level of this allowance and reconsider the level of the small gifts exemption
  • reform the exemption for normal expenditure out of income or replace it with a higher personal gift allowance

Gifting period and taper package

2. The government should, as a package:

  • reduce the 7 year period to 5 years, so that gifts to individuals made more than 5 years before death are exempt from Inheritance Tax, and
  • abolish taper relief 

3. The government should remove the need to take account of gifts made outside of the 7 year period when calculating the Inheritance Tax due (under what is known as the ’14 year rule’).

Liability for payment and the nil-rate band

4. The government should explore options for simplifying and clarifying the rules on liability for the payment of tax on lifetime gifts to individuals and the allocation of the nil-rate band.

Key area 2: Interactions with Capital Gains Tax

5. Where a relief or exemption from Inheritance Tax applies, the government should consider removing the capital gains uplift and instead provide that the recipient is treated as acquiring the assets at the historic base cost of the person who has died.

Key area 3: Businesses and Farms APR/BPR

6. The government should, as a package:

  • consider whether it continues to be appropriate for the level of trading activity for BPR to be set at a lower level than that for gift holdover relief or entrepreneurs’ relief
  • review the treatment of indirect non-controlling holdings in trading companies, and
  • consider whether to align the Inheritance Tax treatment of furnished holiday lets with that of Income Tax and Capital Gains Tax, where they are treated as trading providing that certain conditions are met

7. The government should review the treatment of limited liability partnerships to ensure that they are treated appropriately for the purposes of the BPR trading requirement.

8. HMRC should review their current approach around the eligibility of farmhouses for APR in sensitive cases, such as where a famer needs to leave the farmhouse for medical treatment or go into care.

9. HMRC should be clearer in their guidance as to when a valuation of a business or farm is required and, if it is required, whether this needs to be a formal valuation or an estimate. Other areas of Inheritance Tax.

10. The government should consider ensuring that death benefit payments from term life insurance are Inheritance Tax free on the death of the life assured without the need for them to be written in trust. 

11. The government should review the POAT rules and their interaction with other Inheritance Tax anti-avoidance legislation to consider whether they function as intended and whether they are still necessary.

Useful links

Emily Deane TEP, STEP Technical Counsel

STEP Employer Partnership Forum examines best practice in employee engagement

Speakers and others at our EPP ForumLeading industry practitioners speaking at last week’s STEP Employer Partnership Programme (EPP) Summer Forum discussed how to understand employee engagement, and put new ideas into practice. Particular topics for discussion included flexibility in the workplace, and understanding gender diversity and inclusion. The day was chaired by STEP CEO, Mark Walley and hosted by RSM at its London office. 

Feedback forms and focus groups

Janine Mayor noted employees can easily become disengaged or disillusioned with their roles, and that employers need to find a way to ensure that their people ‘walk into work each day wanting to give their best, and connect with the goals and values of their organisation.’

Key questions should include, ‘What are the relationships like in my organisation? Do people buy into where the company is going? and, Are they engaged with the business and recognised for their achievements?’ Janine recommended employee feedback surveys to understand their needs and wishes, noting that while managers cannot provide everything employees want, through training and good communication, they can effectively respond.

A clear and regular internal communications programme in place will let individuals know they are listened to, supported and recognised. In turn, they will feel part of, and engaged with, an organisation’s journey and goals.

Lorraine Wheeler TEP gave a case study of how her company is putting such steps into practice. She particularly highlighted the use of focus groups.

‘The views of the staff are the key benchmark for what needs to change in any company, and senior staff need to buy in to those views and the changes suggested,’ she said. ‘Focus groups bring inclusivity and also showcase cross-sections of the workforce, and the different needs of different employee demographics.’

Employees must have a ‘safe space’ in which to raise concerns, she added, and management needs to address them. ‘To engage them, they have to be involved, listened to, and taken seriously,’ she said, adding, ‘and then they need to see the results.’

Flexibility and gender diversity

The gender diversity conversation is more important than ever in 2019, as Bonnie Steiner TEP and Rina Goldenberg Lynch stressed in their discussion of workforce inclusion.

They discussed the unconscious bias still existing against women: assumptions that they can’t lead effectively, aren’t ambitious, or will abandon their careers once they have had children.

‘Gender diversity policies are vital to promote change, not just from the ethical perspective, but from the business perspective,’ Bonnie explained.

Aside from the moral implications of a bias against women in the workplace, as well as the possibility of legal complaints against gender non-compliance, the two presented the business case for companies promoting women to boards, from recruitment and retention, to business development and attracting new clients.

Moreover, a balanced male-female board will always show improved decision-making and corporate governance through the different perspectives brought to the table. 

Caroline McCague discussed the importance of increased flexibility: not just for women in the workplace, but for all employees striving to find a work/life balance, noting that too many organisations focus on the physical presence of employees in the office, rather than their goals and productivity.

‘Flexibility should be a strategic tool to supplement engagement, productivity, performance and cultural change,’ she said. ‘Creating a supportive working environment is about helping people to work in different ways as they all work towards the same organisational goals.’

Reviewing the day, Mark Walley said: ‘the Employer Partnership Programme is really important to us at STEP, as it reinforces the relationship between us and the employers of our professional members. We have a shared commitment to the professional standards that we develop, to the training and education undertaken to reach those standards and to the professionalism that is required to become and remain a member of STEP. Together, those elements provide consumers the confidence they seek and is why they come to STEP members for their advice.

‘Events such as the Summer Forum are a fabulous opportunity for EPP partners to come together, share best practice, discuss the issues that they are dealing with and take away actions they can implement right away. The levels of engagement were huge: thank you to all that joined the discussion.’

Helen Swire is News Editor at STEP.

EW to extend online probate service

Daniel NesbittThe online system for England and Wales probate applications is to be extended further, after a Statutory Instrument was laid before the House of Lords last week.

The Non-Contentious Probate (Amendment) Rules 2019 updates previous legislation to allow solicitors and probate practitioners to apply for grants of probate without an invitation from a registry. It also modernises certain definitions, and corrects minor errors, in the Non-Contentious Probate Rules 1987.

As the legislation is a negative instrument, no vote has been scheduled to take place in parliament, so unless a motion to stop it is tabled within 40 days, it will automatically become law, and is due to come into force on 1 October 2019.

The full text of the Statutory Instrument, along with further explanatory information, can be found here: The Non-Contentious Probate (Amendment) Rules 2019 (PDF) .

The changes are unrelated to the government’s Non-Contentious Probate (Fees) Order 2018, which has still not been scheduled for a final vote in the House of Commons.

 

Daniel Nesbitt, Policy Executive, STEP

EW probate delays and disruption: an update

Emily Deane TEPSTEP met HM Courts & Tribunals Service (HMCTS) this week, together with The Law Society and Solicitors for the Elderly, to obtain an update on the delays and disruption to the Probate Service in England and Wales.

HMCTS gave us the following update on work undertaken since our last meeting on 14 May:

  • It has taken on 30 new staff since the transfer to the new system.
  • It currently has 180 employees working across the Probate Service.
  • It has recruited additional legal advisors with probate experience.
  • The registry with the most significant backlog is Winchester, which is sharing its work with other registries.
  • HMCTS is issuing approximately 20,000 grants a month, of which 12-13,000 are from practitioners
  • It is dealing with grants in date order, oldest first.
  • It does not prioritise grants according to urgency, and will not deal with applications more quickly by request.
  • It is entering caveats into the system on the day of receipt.
  • It will not refund probate fees due to delay.
  • It will issue grants of probate in approximately six to eight weeks.

STEP’s request for waived interest, or longer timeframe

STEP is aware that the delays are making it difficult for members to pay IHT on estates, since they cannot gain access to funds until the grants have been issued.

STEP has asked HMCTS to consult with HMRC on this issue, to see if it will waive the interest accrued on outstanding IHT, or permit a longer timeframe for paying by instalments. We stressed that this would help ease some of the time pressure and negligence concerns of our members, and generate some much-needed goodwill.

HMCTS anticipates that once its new digital system is up and running, there will be less scope for administrative and human error. Users will be able to track applications and make corrections online.

It will continue to accept paper applications for those less able to deal with applying online.

  • HMCTS is holding a webinar to demonstrate the new online system for professional users on 4 July.

STEP will be meeting HMCTS again in August for a further briefing.

Emily Deane TEP, STEP Technical Counsel

A welcome return to STEP Canada to attend the 21st National Conference

Canada student winnersIt was an absolute pleasure to be back in Toronto, Canada for the 21st National Conference, the STEP Canada Board meeting and AGM. I had visited in February, early in my tenure, given the importance of the region to STEP overall and to learn more about how we operate in different parts of the world.

I was joined on this trip by Simon Morgan TEP, our worldwide Chair and Jim Walkinshaw, COO Finance and HR, from the London office.

We met the Canada Board on the first day, and then attended the AGM and Board meeting. It was great to meet the incoming and outgoing board members and get the opportunity to update the Canada Board on what we are working on in the worldwide office to further the vision and mission of the society.

In the evening we moved on to a reception which included Simon Morgan and STEP Vice Chair Nancy Golding TEP presenting Prof Albert Oosterhoff with Honorary Membership of STEP. Prof Oosterhoff became the second Canadian to receive such an honour and is one of only 11 worldwide.

The next morning saw the conference open and 784 delegates converge on the Metro Toronto Conference Centre. After the formalities, we were into the first session of the day with Richard Hay TEP leading us through a masterclass thought-leader piece on the effects of globalisation on the tax collection of nation states. The question of whether we could be headed toward a central taxing authority that imposes globally-coordinated taxation may not be so far-fetched; how would we have reacted to the current disclosure rules ten or 15 years ago?

Alongside the many important technical sessions the two other stand-out pieces for me (as a non-practitioner) were the lunchtime sessions. On Thursday we listened to S Jay Olshansky from the University of Illinois looking at ageing and longevity; some of the ‘markers’ for that were surprisingly basic, eg the younger you look, the older you tend to live, and what impact that should have on planning for future health and finances. On Friday we had the equally thought-provoking Caron Croland Yanis sharing her experiences on the intersection of family values, sustainable governance and technical compliance in philanthropy.

Before heading off to dinner we were delighted to attend the Student Awards ceremony where the latest winners were recognised (pictured). I always enjoy these type of events and getting to meet the brightest of the new professionals coming through, and I’m confident that we saw some of the future leaders of the profession. Dinner that evening had to be the networking and social highlight of the two days – held at Arcadian Court, an historic and impressive art deco event space.

For me the barometer of a conference’s success is how many people are still actively engaged at the end of the event – and STEP Canada certainly set the bar high by having a varied and well thought-through programme that kept most of the delegates through to the final sessions.

It certainly met our mission statements of promoting high professional standards, educating professionals and connecting advisors. As ever with these events, the eventual success sits deep in the planning, and I saw first-hand during my visit back in February how detailed, focused and accountable that planning was. Based on that, the event was always going to a success!

Altogether it was a very informative and enjoyable few days. I genuinely learned lots, I have seen content and formats that we can use, and/ or adapt for the Global Congress in Dublin next year, and the networking was outstanding.

Huge congratulations go out to the whole STEP Canada conference programme committee led by Corina Weigl TEP (Chair), Brian Cohen TEP and Richard Niedermayer TEP (Co Deputy Chairs) and the fabulous staff team led by Michael Dodick and Janis Armstrong. What a formidable force to have behind the biggest conference event in the STEP calendar.

It’s always interesting to see what other conferences are on in a major venue. As I arrived in Toronto the hotel and centre was full of body builders at the 2019 Toronto Pro Supershow and EXPO, and as we left the cannabis industry had moved in for the 2019 Toronto Cannabis EXPO – it’s a booming market after it was legalised last year…

Mark Walley is CEO of STEP

What can you do to improve employee engagement?

Christopher TaliaWe all know that employee engagement is important, but that doesn’t mean it’s easy to get right. Next month’s STEP Employer Partnership Programme (EPP) Summer Forum will look at this key area, and help you devise a strategy that works for your organisation.

Employee engagement can mean different things to different people. Some will see it as recognition, others as financial reward. No matter how you view it, employee engagement holds three distinctive characteristics: realising employee potential; clear and shared organisational goals; and promoting employee wellbeing.

Many organisations fall short of achieving one, or all of these factors, leaving employees feeling under-appreciated, and in turn, unwilling to perform at their full potential. So how can employers bridge the ‘employee engagement’ gap while ensuring business success?

The forum, Employee engagement: boosting employee capability and potential for business success, will be hosted by Platinum Employer Partner RSM, and will share valuable insights from the following industry practitioners:

All our speakers have substantial experience in different jurisdictions including Guernsey, Jersey, Switzerland and the UK. Each will share her own experiences, strategies and learning on how they have successfully developed and implemented programmes to support employee engagement.

Key topics will include: what employee engagement means, understanding flexibility in the workplace and understanding gender diversity and inclusion.

If you have ever wanted to know how you can increase both your employees’ potential and their engagement levels, then this is the forum for you. I look forward to seeing you there to learn more about employee engagement.

Christopher Talia, Programme Manager, Employer Partnership Programme, STEP (Christopher will officially join the EPP team from mid-July).

STEP meets HMCTS to discuss EW probate delays

Emily Deane TEPSTEP met HM Courts & Tribunals Service (HMCTS) this week to discuss the backlog of applications and continued disruption to the Probate Service.

HMCTS representatives explained its old database needed to be upgraded, which had prompted the decision to move to digital software. The new system was scheduled to go live in January but was delayed until 25 March following technical glitches. HMCTS explained that it had not anticipated this level of issues with the technology, in conjunction with such a high spike in probate applications.

The following points were raised:

  • HMCTS has brought in 15-20 more people for the national office; a 10-15 per cent increase in those working on the backlogged applications.
  • The remaining probate registries will be closed over the next 12 months. Staff will be given six months’ notice and HMCTS expects to help them all find other roles in the civil service.
  • The new digital system is being delivered from the Courts and Tribunals Service centre based in Birmingham. HMCTS is keen to get more solicitors using the digital pilot, and will be looking for volunteers shortly. This pilot will enable solicitors to issue up to 250 applications per week.
  • Cases are taking up to 30 working days to be processed at the moment.
  • The Probate Registry will publish regular bulletins to improve communication with the public.
  • HMCTS assures users its existing Registry staff are working hard to get through the applications, and issued 960 grants on a single day this week.
  • HMCTS requests users not to chase applications, as they are being dealt with by date order.
  • HMCTS is currently up to date with caveats.

STEP expressed its disappointment that the court service was not better equipped to deal with the spike in applications. The Ministry of Justice had issued reassurances earlier this year that the court service was prepared for an increase due to the proposed increase in probate fees. STEP noted HMCTS was ill prepared to merge the new online system, change the format of the certificate, close registries and cut staff all at once. 

STEP repeated its suggestion that HMCTS should change the fee implementation date to the date of death for applications, to relieve the pressure and generate some goodwill amongst the industry and the public. The idea should be seriously considered, given pressure on practitioners and members of the public is considerable, and is causing a great deal of anxiety. 

STEP has also provided feedback to HMCTS on errors in the new-style grants that members have received, together with feedback on how they could be improved. We have explained why the will should continue to be annexed to the grant of probate, and the difficulties caused if it is not.

The Statutory Instrument to increase probate fees is still waiting to be scheduled for approval in parliament, and we will continue to monitor and report any developments (latest update).

Emily Deane TEP, STEP Technical Counsel