Private ClientFile December 2010
Two Rugby Law Firms Merge
Brethertons LLP confirms that from 1 December 2010, Hodsons solicitors in Rugby formally merged with Brethertons LLP. Hodsons is incorporated with Brethertons LLP and the merged firm will be called ‘Brethertons LLP incorporating Hodsons’.
The merger brings together two well-established Rugby law firms with reputations for quality advice and service. The two firms have been practising law in Rugby for a combined period of over 275 years.
Hodsons has a reputation for legal excellence and client service that goes back generations and is well known in the town for its specialist advice in Wills, Conveyancing and Family law.
Richard Pell, Senior Partner said:
“For Brethertons, we are delighted to welcome our Hodsons colleagues to the merged firm and look forward to working together. It is true to say that our two separate firms have been servicing the legal needs of Rugby clients for some time albeit as two separate firms. Now the bringing together of our two operations provides a greater presence in Rugby as one single law firm, and introduces to our clients a greater and deeper range of legal services in both private client law and commercial law.”
Jeffery Glenn, Managing Partner at Hodsons said:
“For clients, the bringing together of Hodsons' and Brethertons' expertise is an opportunity to benefit from a greater pool of knowledge and experience that will be available to clients. We are very pleased to be merging with Brethertons at this time in our two firms’ histories.”
The Hodsons premises in Rugby, Glebe House, will remain open well into 2011.
Brethertons Achieves Top score in Legal 500 League Table
Brethertons has once again featured strongly in the latest edition of the Legal 500 – the comprehensive annual review of the legal industry.
This year the firm had four new practice areas recognised by the researchers: Agriculture and Estates, Corporate & Commercial, IP & IT and PI: Claimant. Other departments recognised include: Commercial Litigation, Commercial Property, Debt Recovery, Employment, Family and Wills, Tax and Trusts.
Senior Partner Richard Pell explains: “We are delighted our lawyers have been recognised for their continued hard work, commitment and expertise. It is a tremendous tribute to their efforts that we continue to be rated as a quality firm.”
From the Legal 500 – Areas where the firm’s teams are singled-out for particular praise include:
Recommended in Commercial Litigation: Brethertons LLP’s team has outstanding property litigation expertise, and serves as honorary solicitors to the Institute of Residential Property Management. Shaun Jardine is ‘accessible, cheerful and has an iron fist for the opponent’, while legal executive Sioban Calcott has ‘a very quick grasp of the facts and is able to suggest appropriate courses of action’
Recommended in Commercial Property: Mary Anderson heads Brethertons LLP’s commercial property team and has considerable experience in secured lending transactions, representing both lenders and project financiers.
Recommended in Debt Recovery: “Headed by Shaun Jardine, Brethertons LLP is praised for its “can-do” mentality’, and is instructed by national and international clients, including property management companies and wine producers. The team maintains its presence on the panel of Top Service, which has brought in instructions from construction clients.”
Recommended in Employment: “Brethertons LLP’s team advised on the exit of a number of directors from organisations.”
Recommended in Agricultural Law: “Brethertons LLP has a ‘small, strong and well-connected’ team, which includes ‘exceptional’ new addition Tristram van Lawick. Elizabeth Young another contact.”
Recommended in Family: “Brethertons LLP’s Simon Craddock, an ‘excellent and leading practitioner in international child abduction cases’, is regularly appointed in Hague Convention cases.” “Brethertons LLP has four trained collaborative lawyers and considerable experience in representing parents in international child abduction cases. Linda Jones gives ‘superb advice’, and is a Resolution-accredited specialist in the area of pension law issues within family proceedings.”
Recommended in IP & IT: “Brethertons LLP has been advising on a wide range of issues, including software licensing agreements. Brian Auld is the key contact.”
This accolade follows the recent news that Brethertons has received national recognition of its practice management standards, having been awarded the Law Society’s Lexcel Quality Certification. In addition, five senior experts were recognised as ‘Leaders in their Field’ specialising in the areas of Litigation, Insolvency, mediation, commercial property, commercial secured lending and Child Abduction - according to the independent legal ‘bible’ Chambers UK 2011
Brethertons celebrates Will Aid success
Brethertons solicitors are celebrating yet again at the success of another November Will Aid campaign. This is the 4th year we have been involved with the Will Aid campaign and in total have raised over £23, 000
Every November, Will Aid works with solicitors all over the UK to run National Make a Will month.
Will Aid is a scheme designed to raise much needed funds for nine UK charities, these include: Actionaid, Age UK, British Red Cross, Christian Aid, NSPCC, Save the Children, The Scottish Catholic International Aid Fund (SCIAF), Sightsavers and Trocaire
Solicitors around the UK donate their time to support the Will Aid charities and instead of paying a normal fee for writing a basic Will during the month of November, clients are asked to donate to the Will Aid charities. The suggested donation was £75 for a single basic Will and £110 for a pair of mirror Wills.
Across Brethertons offices in Banbury, Rugby and London, the team worked hard to use their knowledge and expertise to make the scheme such a success. In total, over 165 Wills across the three offices have been drafted for Will Aid clients, and in excess of £8550 has been raised. This is a truly remarkable achievement. The money will be put to work by all nine Will Aid charities, to make a real and immediate difference to the lives of people in need in the UK and around the world.
Elizabeth Young, head of the private client team, explained why they became involved: “We have been participating in Will Aid for a number of years. We feel it highlights the importance of making a Will and also benefits worthy causes at the same time. Our clients were extremely pleased that Brethertons were working hard to raise money for the various charities involved. Many clients were very surprised – pleasantly surprised – to learn that we received no payment whatsoever for the service we were providing.”
“We have been overwhelmed by the community’s support for Will Aid and for Brethertons participation. The scheme has enabled us to make a very substantial contribution to the Will Aid charities. It required a lot of dedication and hard work but was well worth the effort. Making a Will is one of the most important things we can do to protect those we love. Yet it is surprising that fewer than half of people have made one.”
Shirley Marsland, Will Aid campaign manager, said: “We are so grateful for Brethertons participation in Will Aid. It is amazing that all those involved worked so hard to draft so many Wills for clients and raise this enormous sum in a few weeks. We’d also like to thank all those members of the public who were motivated to make their Will with Will Aid. The money they donated will make a real difference to the lives of children, families and older people in need around the world.”
Will Aid have raised more £8 million in donations and very much more in legacies since its launch in 1988. The last campaign in 2009 raised over £1.25 million in donations. The money raised is shared by the Will Aid charities and is used to transform the lives of people in the UK and around the world.
The Rise of the Pre-Nuptial Agreement
News of the decision in Radmacher v Granatino has sparked the public’s interest in pre-nuptial agreements. Previously, pre-nuptial agreements have been unenforceable in the UK. However, with the Supreme Court’s recent ruling, greater weight has been given to the enforceability of these agreements.
We have all heard of ‘pre-nups’, but what actually is a pre-nuptial agreement? Linda Jones of Brethertons LLP explains, ‘A pre nuptial agreement is a written contract that sets out how a couples assets are to be divided in the unfortunate event that their marriage fails and divorce proceedings are initiated. The agreement can subsequently be taken into consideration by the Courts when dividing the parties’ assets.’
In the absence of a pre-nuptial agreement, divorce courts have the last word in the division of matrimonial assets. The courts decisions are extremely unpredictable and vary not only from court to court, but also from judge to judge – individual judges have a significant amount of discretion when dealing with finances on divorce. However, with a pre-nuptial agreement both parties to the marriage can have greater control when deciding how they would want their finances divided in the event that they should divorce. As highlighted in the recent case of Radmacher v Granatino the courts are increasingly recognising a correctly prepared pre-nuptial agreement, so why leave such an important decision to the unpredictability of the court system?
When drawing up a pre-nuptial agreement, it is vital to take legal advice, as the enforceability of the agreement depends upon a number of factors. First of all, an extremely important feature of the agreement is that both parties receive independent legal advice. Secondly, there must be ‘full and frank’ disclosure between the parties – that is to say that each party must be made fully aware of the other’s financial circumstances. Another important factor within a pre-nuptial agreement is that the agreement must be signed at least 28 days prior to the intended marriage taking place.
Don’t take the risk of not having a pre-nuptial agreement professionally drawn up. There are some legal documents where ‘off the shelf’ documents may be an option, but this is not the case when drafting a pre-nuptial agreement as it is likely that it will result in an incorrectly prepared agreement that the courts may not take into account in the event of divorce.
If you are interested in having a pre-nuptial agreement drawn up, or would like to speak to someone further regarding any family related issue, then please contact our Family Department who will be happy to help you.
Principle Private Residence Relief – Prove it or lose it
The Capital Gains Tax (CGT) reliefs for property owners are surprisingly generous in the UK and provide a variety of tax planning opportunities. The rather beneficial tax regime is probably why many people think that the ability to make an election that a property is your ‘principal private residence’ (PPR) is purely a matter of routine.
However, the availability of PPR relief is, as a taxpayer discovered recently, a matter of fact and, when challenged, must be substantiated.
The property in question was a flat in South London, which had been bought in 1999 and sold in 2004. During the intervening time, it was let, but the owner, who was self-employed and filed tax returns annually, neglected to declare the rental income on the returns.
The gain on sale for tax purposes amounted to more than £70,000. The taxpayer contended that for part of the time of ownership, it had been his PPR, which meant that more than £50,000 of the gain would not be subject to CGT. He also claimed a further relief that applies when one’s PPR is let for a period of time, with the net result that he claimed that no CGT was due.
The response of HM Revenue and Customs (HMRC) was ‘prove it’. The First-tier Tribunal found that the man had ‘not discharged the burden of proof required to demonstrate that he occupied the property as his only or main residence during 2001 or at any other time. There is a complete absence of objective documentary evidence to show that the Appellant resided at the property’.
The result was that the man now faces a CGT bill on the gain and the related costs of the legal battle.
HMRC take a tough line when they suspect tax due has been evaded. Recently, it was revealed that HMRC had undertaken a criminal investigation into an accounting firm and written to the clients of the firm to advise them that they were inviting them to make a full disclosure of their tax liabilities.
Poor Plan on Conveyance – Court of Appeal Rules
A poorly-drafted plan and a refusal to compromise have led to an argument over the boundary between two rural properties reaching the Court of Appeal.
The argument between the owners of adjacent land arose because there was a brook and a fence that were close to one another. One owner claimed the fence was the boundary whereas the other held that the brook divided the properties.
The map accompanying the conveyance was unclear – it merely showed a wavy line which represented the stream. The fence was not shown on the plan. However, because the fence was in situ when the land was conveyed, Lord Justice Mummery ruled that it marked the boundary between the properties. When giving his judgment, he was highly critical of the inability of the neighbours to compromise and of the resultant costs for the loser of the dispute.
Be that as it may, it has been reported that an appeal to the Supreme Court is under consideration.
Clarity of documentation in conveyances is essential if the risk of future litigation over boundaries is to be prevented, say.
Right to Buy Extends to Buildings Not Used as a Home
A recent case confirms that for the purposes of the Leasehold Reform Act 1967, which gives tenants of let houses the right to buy them in appropriate circumstances, a ‘house’ need not be used as a residence in order for the right to buy to be exercised. Also, the legislation governing the right to buy does not require tenants to live in the property.
In the case in point, three terraced houses in London were being used for short-term accommodation by tourists when the tenant, who had a lease over all three properties, applied for the right to buy them.
The 1967 Act was not created to allow commercial tenants to acquire residential property freeholds but, when the necessary circumstances are met, it does allow this, because there is no requirement that a tenant must occupy a property in order to exercise the right to buy it.
A building is a house if it:
• is capable of being separated vertically from a next door building and there is no substantial overhang of one by the other;
• was designed or adapted for living in unless substantially adapted for another purpose later; and
• can reasonably be called a house.
On the basis of the definition, the three buildings qualified as houses and thus the tenant was able to exercise the right to buy them.
In his judgment, Lord Neuberger described this as a good example of ‘the law of unintended consequences’.
Heritage Property – New Guidance
The term ‘heritage property’ normally refers to works of art or important buildings that are of significant cultural importance. There are special rules for dealing with such property when it comes to capital taxes and, in appropriate circumstances, the rules allow it to be accepted in satisfaction of Inheritance Tax (IHT) and Estate Duty and conditionally exempt from other capital taxes.
For example, a painting of Venice by 18th Century Italian master Guardi was recently accepted in lieu of an IHT liability, and because the painting was worth more than the IHT due, a payment was made to the estate.
The relevant guidance on heritage property is contained in leaflet IR67, which was last updated in 1986. HM Revenue and Customs have announced that this is to be revised and new guidance will be published soon. It is rumoured that this will restrict the available relief on heritage property, which has been abused in some instances.
HMRC Tax Attack on Property Undervaluation Successful
A robust attitude taken by an executor to the valuation of a property came to nothing recently when HM Revenue and Customs (HMRC) were successful in defeating the executor’s claim that a property valued by them at £475,000 for Inheritance Tax (IHT) purposes should be valued at £400,000.
The most surprising aspect of the dispute was HMRC’s agreement to the IHT valuation of £475,000, as the property was sold two years after the death of its owner for £675,000.
Criticising the executor’s evidence as ‘misleading’, the Tax Tribunal accepted that HMRC’s valuation should apply.
HMRC will often reopen IHT returns where assets, especially houses, are included in estate valuations for IHT purposes and are subsequently sold for a much greater sum than their probate valuation. A new penalty regime, which came into force in April 2010, makes undervaluations a significant risk for executors.
We can help you avoid problems with HMRC in dealing with the tax aspects of an estate.
