Meeting new friends and old at the STEP LatAm Conference in Sao Paulo

Enrique Martinez Guzman (right) 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.

Mark Walley is CEO of STEP

 

Trust Registration Service: clarification on reporting requirements

HMRCIt has come to STEP’s attention that in HMRC’s GOV.UK guidance on how to register a trust, the guidance about which beneficiaries need to be registered on the Trust Registration Service (TRS) differed in certain important respects from the HMRC guidance that was published on 22 November 2017.

For example, the GOV.UK guidance said: ‘When a member of a class becomes known they must be named, even if they have not benefited yet’, whereas HMRC’s 22 November 2017 guidance said: ‘…But where a beneficiary is un-named, being only part of a class of beneficiaries, a trustee will only need to disclose the identities of the beneficiary when they receive a financial or non-financial benefit…’.

STEP contacted HMRC about this discrepancy and it confirmed that the 22 November 2017 HMRC guidance ‘is still current and correctly reflects the requirement for trustees to disclose details of the identity of all named/known beneficiaries.’ HMRC has since made amendments to the GOV.UK guidance with regard to which beneficiaries must be disclosed.

HMRC also confirmed that although the GOV.UK guidance states that trusts that have registered for FATCA/CRS do not need to be registered on TRS, this is not accurate. The inaccuracy reportedly results from an incorrect transposition of guidance that was in the August 2018 Trusts and Estates Newsletter, which referred to trusts that need to report under FATCA or CRS that don’t have a Unique Taxpayer Reference (UTR). To date, however, HMRC has not amended the GOV.UK guidance in this regard and STEP will be taking up this issue with HMRC.

Imogen Davies TEP, STEP UK Technical Committee

UK government drops probate fee increase

Daniel NesbittSTEP is delighted and relieved by the news that the proposed increase in probate fees in England and Wales has been dropped.

News reports emerged early on Saturday morning (12 October 2019), to the relief of practitioners and others in the industry.

‘STEP welcomes the news that the government has decided to scrap the proposed increase in probate fees,’ STEP Technical Counsel Emily Deane TEP said. ‘This follows many months of work by STEP and many others to highlight the unfairness of the proposed increase, which amounted to a stealth tax on the bereaved. This at last brings an end to the uncertainty and worry that these proposals have caused to grieving families.’

The controversial proposals to charge higher fees emerged in November 2018. An estate of GBP300,001 – 500,000 would have had to pay GBP750, a 249 per cent increase from the current GBP215 flat fee, while the largest estates of GBP2 million and over, would have been charged as much as GBP6,000; an extraordinary 2,691 per cent rise.

The government’s reasoning behind the increase was that the probate system should fund improvements to the courts service.

The increase mooted in November 2018 was essentially a re-hash of a proposal first put forward in February 2016, which had suggested even higher fees. The Ministry of Justice (MoJ) had issued a consultation paper increasing fees for estates of over GBP50,000 with a banded fee structure depending on the estate value. Larger estates faced a 13,000 per cent rise to GBP20,000.

STEP strongly opposed the proposed fees on the basis that they would be completely disproportionate to the service provided by the probate court, and would effectively be a new tax on bereaved families (consultation paper pdf).

STEP raised concerns on the grounds of fairness, practicality and legality, in particular that the measures being introduced via the Draft Non-Contentious Probate Fees Order 2017 might be ultra vires, i.e. beyond the power of the order. We obtained a legal opinion from leading expert in public law, Richard Drabble QC, who confirmed that ‘the proposed Order would be outside the powers of the enabling Act’ (read blog).

Many other responses echoed STEP’s views, with over 97 per cent of respondents opposing the proposals.

The House of Commons Joint Committee on Statutory Instruments (SI) also questioned the legality of the proposals, given that the new ‘fees’ looked very like taxes.

Despite the opposition, the Probate Fees Order was pushed forward, and was only dropped when the then Prime Minister Theresa May called a snap election in April 2017. The proposals then re-emerged in November 2018 and while the headline charges were less extortionate than were previously proposed, the same concerns about process and fairness remained.  It remains to be seen whether these proposals will re-emerge, for a third time, at some future point. If probate fee reform does rear its head again, we hope it will be done in a fairer and more transparent way, with greater consideration for bereaved families.

Daniel Nesbitt, Policy Executive, STEP

STEP attends Global Tax Advisers Platform conference in Turin

Emily Deane TEPSTEP attended the Global Tax Advisers Platform (GTAP)’s inaugural conference ‘Tax & the Future’ in Turin, Italy last week, alongside many leading European tax advisors. The event was hosted by the foundation of Confédération Fiscale Européenne (CFE) Tax Advisers Europe, which was celebrating its 60th anniversary (press release).

The GTAP was set up by the founding organisations, CFE, Asia Oceania Tax Consultants’ Association (AOTCA) and West African Union of Tax Institutes (WAUTI) in 2014 to facilitate networking links and enhanced dialogue between tax advisors throughout the world. Panel experts, including STEP’s Deputy Chair, David Russell QC TEP discussed a variety of prominent global issues including the future of global tax policy, the longevity of the global tax profession and business models and tax sustainability.

During the conference, the founding bodies of the GTAP signed the Torino-Busan Declaration, a binding document in which they define their main purposes: shaping the contemporaneous developments in the field of global taxation and ensuring the fair and efficient operations of national and international tax systems. GTAP sets out four key short-term priorities in the Declaration which include a focus on tax for growth, sustainable tax policies, tax and digitalisation and taxpayers’ rights and certainty in a fast-paced world.

The objective of the Declaration is to regroup the joint efforts of the GTAP members around these priorities, in order to draw attention on the need for recognition of the rights and interests of taxpayers, and the role of tax professionals.

STEP was a signatory to the Declaration and continues to promote the fair and efficient operation of national and international tax systems. A copy of the Declaration will be available on the CFE website in due course.

Emily Deane TEP, STEP Technical Counsel

Online probate applications update – Oct 2019

Rita Bhargava TEPHM Courts and Tribunal Service (HMCTS) recently organised a focus group, attended by practitioners from across the industry and representatives of various professional bodies, as part of its ongoing changes to the rules and processes around probate applications in England and Wales.

As Deputy Chair of STEP’s England and Wales Regional Committee, I attended the meeting on behalf of STEP.

As part of the meeting, representatives of HMCTS confirmed that the new online probate application process was scheduled to go live today, 1 October 2019. At present the system will be unavailable for more complicated applications, for example where the deceased was domiciled outside the UK or where an executor has lost capacity.

Practitioners who do use the online system will benefit from increased transparency around the status of their application; with a dashboard function tracking the progress of an application and showing which stages it has completed.

During the meeting a number of other key points were raised that practitioners may find of interest:

  • All law firms will have to apply to use the new online service, with applications being approved by HMCTS.
  • Practitioners will still be able to make paper applications. There will not be a specific time advantage to using one method over the other, as both paper and online applications will be progressed under the same timeframes.
  • HMCTS representatives have provided the reassurance that as part of the new system the original will is still going be ‘forensically’ checked by two officials.
  • When an application is made for a grant, a sealed copy of the will won’t be provided unless specifically requested. This will incur an additional charge.
  • All paper applications must now be sent via recorded delivery.

STEP will continue to monitor the changes to the Probate Service (as well as the ongoing situation around probate fees), and will provide further updates where appropriate.

Rita Bhargava TEP is deputy chair of STEP’s England and Wales Regional Committee