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Charity Commission Increases Trustee Burden

Charity trustees are advised that the Charity Commission has published a new risk framework outlining how it will exercise its supervisory function over charities in the future.  The new approach is a ‘risk-based’ approach and the Commission will check a sample of charity accounts each year.  The new framework includes a ‘greater expectation for trustees to tackle issues of potential risk to their charities head-on.’

We advise charity trustees to familiarise themselves with the new risk framework and contact us if they need advice about legal aspects of their charity’s operation or their roles as trustees.

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HMRC Flushes Out Tax Dodging Plumbers

HM Revenue and Customs (HMRC) have announced that they are turning their attention to eBay traders and continuing to target tradesmen (especially those in the home improvement trade, such as electricians and plumbers) in a bid to discover under-declarations of income.

So far, the campaign targeting plumbers has yielded nearly £4m and ten plumbers have been arrested. More than 1,000 cases have been prepared in which underpaid tax has been alleged. These cases will require only the ‘balance of probabilities’ to show tax evasion. In criminal cases (tax fraud), the criminal burden of proof applies, but a conviction leaves open the possibility of asset seizures under the Proceeds of Crime Act 2002. HMRC is said to be planning more arrests.

Commission-only salespeople are also to be targeted.

HMRC will use specialised software to detect and identify online traders.

If you become aware that you are under investigation by HMRC, contact us for advice.

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Unsubstantiated Will Challenge leads to Adverse Costs Order

A recent case illustrates that those who challenge a Will may find themselves liable for costs unless the challenge has some substance to it.

George Wharton, 78, was suffering from terminal cancer.  In 2008 he made a deathbed Will leaving his estate to his long-standing partner, whom he married shortly afterwards.  He made no provision in the Will for his three daughters from previous relationships.

The Will was challenged by Mr Wharton’s daughters on the basis that their father did not know and approve of its contents and that undue influence had been brought to bear on him by his new wife.  The allegations were found to be unsubstantiated.

It is a general rule in assessing liability for costs in litigation that the losing party will be liable both for his own costs and for those of his opponents.  In the case of a disputed will, this general rule can be displaced and an order made by the court for the costs to come out of the disputed estate.

The judge was invited to order that the costs of the action should come from the estate but instead ordered that the deceased’s daughters should bear the costs on the basis that neither Mr Wharton’s actions nor those of his widow had led to the case being brought to court and that there were no reasonable grounds to question the validity of the Will.

Mr Justice Norris commented, “A case based on undue influence is one founded upon a very serious charge which ought not to be pleaded or pursued unless there is a proper factual foundation from which the necessary inference can be drawn.”

The daughters were also ordered to pay the costs of the solicitor who drew up the Will and against whom allegations of improper conduct had been made that were not proven.

Clearly, anyone contemplating challenging a Will needs to be aware of the risks of becoming liable for costs and to consider carefully the strength of the grounds for the challenge before proceeding.

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Controversial Deathbed Will Decision Overturned

A controversial decision about a ‘deathbed will’ has been overturned by the Court of Appeal.

The case concerned a challenge to a will made only hours before the testator died in hospital.  His revised will made his sister (now also deceased) his sole beneficiary.  The will was written out longhand by his sister’s daughter and apparently signed by his sister on his behalf when he proved to be too feeble to hold the pen.  Handwriting experts had given evidence that the signature was not that of the deceased.

Despite conflicting evidence as to how the will was signed – one witness claimed it was his daughter or perhaps grand-daughter who ‘steadied his hand’ – the lower court accepted that the deceased had sufficient mental capacity to create a new will and that the signature was added ‘at his direction’.

However, the Court of Appeal ruled that there was insufficient evidence that the testator had given a ‘positive communication’ to his sister that she should sign the will.  It was therefore ruled to be invalid.

This case will come as a relief to families concerned that a Will that is made in the last few hours of a relative’s life may suddenly materialise and undermine the previously understood position.  It affirms that, in such circumstances, the Court will require relatively strong evidence that the deceased was of sound mind and had genuinely changed their mind in their final hours, not just acquiesced to the wishes of others.

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Obeying the Rules of Service “to the Letter”

When giving a legal notice, the wisdom of using a method by which delivery is proven (i.e. recorded or special delivery) has been reinforced by a recent decision of the High Court.  In this case, a company served a counter-notice on their opponent by post.

Under the Interpretation Act 1978, postal service of a notice is deemed to be effective if the document is properly addressed, pre-paid, and posted.

If this is done, the document is considered to have been served ‘at the time at which the letter would be delivered in the ordinary course of post’.

However, there is a catch.  If (using the civil or ‘balance of probabilities’ level of proof) the addressee can prove to the contrary that delivery did not occur, then the document will not be considered to be served.

The company was able to prove to the Court that the notice had been properly addressed and posted.  However, the Court accepted their opponent’s evidence that it had, in fact, not been delivered in time and was not therefore properly served.

For the small additional cost and inconvenience involved, if the postal system is being used to serve a time-sensitive document, it makes sense to also use a method (such as recorded or special delivery) by which delivery can be proved to actually have taken place, not just to put one’s faith in the regular postal service.

Failure to establish proper service of documents can often be fatal to a claim.  Please contact us if you would like advice about trust and estate disputes.

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Abracadabra – Magic in the Court of Appeal

You may think it nonsensical that a court can order someone to produce something that they do not have, but that is precisely what happened in a recent case.

The dispute concerned a debt of some $50 million.  The Court of Appeal ruled that the beneficiaries of a trust (who, it was claimed, owed the money) should be ordered to attend court to produce certain documents that were in the hands of the trustees of the trust.

In the view of the Court, the beneficiaries of a trust have the right to demand the documents of the trustees, so could be ordered by the Court to produce them for the purposes of resolving a dispute.  The debtors had transferred their assets into the trust and claimed that they could not produce the information required, which was contained in documents that were not within their ‘knowledge, possession, custody and control’.

The Court refused to accept their argument, agreeing with the decision of the lower court that it was correct to regard the documents as being under the beneficiaries’ control.

It is important to take proper advice before attempting to place assets into trust (for whatever reason) and we would be pleased to advice.

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Scales of Justice

Rock Star Fiancée Seeks Settlement From Estate

The fiancée of rock musician Gerry Rafferty, who died in 2011, is to apply to the court for financial provision to be made for her out of his estate.

Under the Inheritance (Provision for Family and Dependants) Act 1975, a person who is dependent on another person who dies leaving insufficient financial provision for them can apply to the court for ‘reasonable financial provision’ from the estate.

Rafferty had a will, which he made shortly before he met Enzina Fuschini.  They became engaged in 2009, but he never changed his will.  Unlike marriage, an engagement does not automatically revoke an existing Will.

He left an estate valued at more than £1 million, mainly based on royalties from his several hits in his own name, such as the rock classic ‘Baker Street’, and also from those with Stealers Wheel.