HMCTS announces interim operational arrangements

emily-deane-tep-2018-v2Update 25 August 2020: HM Courts & Tribunal Service (HMCTS) has provided some further guidance in relation to submitting England and Wales probate applications in the correct format:

  1. If you have lodged an application through the online portal using your registered account you do not need to send any application forms, when you send in the will and other supporting documents. If you send either of the application forms, PA1P or PA1A, this will delay your application. Please only send in the supporting documents requested on the summary page.
  2. Form PA13 is only for use by personal applicants and not to be used by legal professionals. Please lodge the usual lost will affidavit and supporting exhibits. Changes are being made to GOV.UK and form PA13 to show only for use by personal applicants. Using form PA13 will delay your application if you have not provided an affidavit.

More information on on how to apply online is provided here: www.gov.uk/guidance/hmcts-online-services-for-legal-professionals.

Update 11 June 2020: HMCTS has published the attached FAQ document (pdf) for professional users of the Probate Service to support professionals with online applications. HMCRS has confirmed that this is a working document which it intends to continually update as the process continues to evolve.

If you have any feedback on the FAQs please send your comments to policy@org.uk.

Update 1 May 2020: 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 policy@step.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: The Administration 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 35(4),
  • 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: The Administration 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:

You can find where to send your forms at the Directory of probate registries and appointment venues (PA4SOT).

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.’

For further information on how to apply online, please use HMCTS online services for legal professionals.

STEP will continue to keep you apprised of any changes to the service made by HMCTS.

Emily Deane TEP, STEP Technical Counsel

GDPR and trusts and estates: new guidance coming

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

Progress on UK probate delays

Emily Deane TEP

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.

If you want to apply for a grant of representation or caveat online, please visit HMCTS online services for legal professionals.

HMCTS is encouraging everyone to apply online so that HMCTS can continue to work remotely on the applications.

Updated 10 March 2020: It is now possible to make an online application for a Welsh grant via: A oes gennych chi dystysgrif marwolaeth?

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:

Timeframe

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.

Online system

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.

Customer Service

From 2 December 2019 the CTSC customer service centre will be open from 8am-8pm Monday-Friday and from 8am-2pm on Saturday.

If you continue to have issues with a probate application please contact HMCTS by email: probatefeedback@justice.gov.uk

Alternatively, contact STEP’s Policy Team and we will direct you to someone at CTSC who can assist.

STEP will continue to meet with HMCTS regularly next year to discuss future changes to the service and feedback from the industry.

Emily Deane TEP, STEP Technical Counsel

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

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

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

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