Landed Estates Annual Review 2016 - Saffery Champness€¦ · Landed Estates Annual Review 2016 3 It is true that CGS doesn’t offer quite the monetary benefit of AIL, which in practice

Landed Estates Annual Review 2016

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Contents

Welcome 1

The Acceptance in Lieu and Cultural Gifts Schemes 2

The challenges facing a modern estate 6

Dealing with farming losses and running a successful shoot 8

VAT and the ‘Transfer of a Going Concern’ 11

Diversification and the next generation 13

Land reform in Scotland: what does it mean in practice? 16

Succession and inheritance tax 20

The variation of trusts 23

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Welcome

Welcome to the 2016 issue of Landed Estates Annual Review, in which we look at some of the many challenges currently facing estates and rural businesses.

With a Euro in/out election in prospect this year, the seemingly never ending question about interest rate rises, and farm commodity prices at such challenging levels, the business environment for our estate clients presents a lot of uncertainties, but hopefully some opportunities as well.

Our 2016 issue of Landed Estates Annual Review has a good number of external contributors focusing on positive opportunities and innovative projects in a variety of areas.

I am very grateful to Edward Harley, Chairman of the Acceptance in Lieu Panel, for explaining a little more about the Acceptance in Lieu Scheme and its workings in our first article. There is no doubt that this, and the Cultural Gifts Scheme, is a very valuable facility in the right circumstances.

Nicholas Pritchard, Resident Agent at the Bramham Park Estate, very kindly took the time out of his busy schedule to explain a little more about the challenges he faces, dealing with the day-to-day operation of an anaerobic digestor and the organisation of the annual Leeds Festival, amongst many other things.

Our other external contributors include two young successors, Harry Williams-Wynn and Alexander, Viscount Newport, who explain more about the diversification projects they are passionate about: one is restoring a grouse moor to its former glory and the other is investing outside the core estate in a portfolio of commercial property.

Our final external contributor is James Rivett of Pump Court Tax Chambers. He explains more about the different ways to vary the terms of a trust.

Our other articles focus on some of the other important issues for landowners. We revisit our fictional estate-owning family to see how they deal with farming losses in the light of the terrible weather experienced earlier in the year and also look to organise a shoot on a more business-like footing.

Our VAT-focused article concerns the intricacies of transferring a business as a ‘going concern’. We also look at the arguments and changes emerging from land reform in Scotland.

Our final article takes a closer look at the inheritance tax planning that will assist landowners in their preparations for succession. The key message here is that it is never too early to begin thinking about this.

I do hope that you find this publication both interesting and relevant. As always, if there are any issues that you would like to discuss further, my fellow partners and I will be very happy to help.

Liz Brierley Head of Landed Estates

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The literary certainties of death and taxes seldom combine with much harmony. But in 1910, more than 100 years ago, Parliament enacted the Acceptance in Lieu Scheme (AIL) as a happy exception to this rule.

Initially AIL was a means to offer landed estates to the Treasury in payment of death duties. This would relieve the huge financial burdens which those duties caused. In the 1950s, Parliament extended the scope of AIL to chattels. And in 1975, this highly successful scheme was adapted to inheritance tax.

Two categories of chattel can be accepted. The first includes the contents of important buildings owned by public bodies or the National Trusts. The second comprises chattels which HM Revenue & Customs (HMRC) consider, individually or as a collection or group, to be of pre-eminent interest in their own right – in the vernacular, la crème de la crème.

HMRC does not decide pre-eminence and valuation unilaterally. It seeks advice from the AIL Panel, an independent body appointed by Arts Council England (hereafter ‘the Arts Council’). The Chairman of the AIL Panel is Edward Harley, who very kindly agreed to meet and discuss AIL and its young sibling the Cultural Gifts Scheme (CGS).

Edward Harley is a past President of the Historic Houses Association and has a close association with numerous charities, many with connections to the arts. This has necessarily brought familiarity with and an enthusiastic fondness for the AIL Scheme and the incipience of CGS. Following the formal process of appointment by the Chairman of the Arts Council in consultation with the Secretary of State, he succeeded to the Chairmanship of the AIL Panel in 2013.

CGS was enacted in 2012 and began operating in 2013. Some had questioned AIL’s confinement to inheritance tax. CGS goes some way to answering them. Today, individuals and companies can give highly important chattels to the nation and, in return, HMRC will reduce their income tax bills by 30% (20% for companies) of the value of the gift and they pay no capital gains tax or inheritance tax on the gift.

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The Acceptance in Lieu and Cultural Gifts Schemes

Edward Harley has been the Chairman of the Acceptance in Lieu Panel since 2013. He very kindly agreed to speak to us about the Acceptance in Lieu Scheme, its workings and its successes.


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It is true that CGS doesn’t offer quite the monetary benefit of AIL, which in practice will often settle up to 70% of the offeror’s liability for inheritance tax. But Edward Harley points out that CGS operates in donors’ lifetimes. Owners have the glow of seeing their gifts displayed in the UK’s public collections of, wherever possible, their own choosing. There has often been a nexus between donor and accepting institution. This contrasts with AIL which normally operates only after the owner’s death.

Edward Harley adds that CGS is designed to elicit philanthropy and enrich the nation’s public collections. CGS strikes a happy balance between these objectives. This is particularly beneficial in times of straitened public finances. And its popularity is growing steadily. In its first three years, one, then four, and then six such gifts were accepted.

In practice too a difference has emerged in the nature of the chattels offered. Perhaps a consequence of greater individual liabilities for inheritance tax than other taxes, AIL has secured some of the greatest and most valuable works of art in payment of very substantial amounts of inheritance tax. To date, CGS has tended to attract a very wide range of objects at lower values.

The Panel’s achievements are published annually in the Cultural Gifts Scheme and Acceptance in Lieu Report. Edward Harley is astute not to pick favourites but did own up to a fondness for Corot’s L’Italienne (pictured right). Indeed he selected it for a recent My Favourite Picture feature in Country Life magazine. This work was accepted in lieu of inheritance tax from the estate of the late Lucian Freud. It now hangs in the National Gallery.

The AIL Panel: a simple and impartial process

One of the most attractive elements of AIL and CGS extolled by Edward Harley is simplicity. It is true that most offerors would need advice over the quality and value of a chattel before offering it. Advice will be necessary too over inheritance tax or other tax-related considerations. That aside, all that is needed is an offer to HMRC for AIL, or the Arts Council for CGS. It is all spelled out on the Arts Council’s website.

Particulars of the chattels offered will come before the AIL Panel. Membership is drawn from curators and the art trade, all leading experts in their fields. Recent recruits include the archive and manuscript consultant and former Head of Valuations at Bernard Quaritch Joan Winterkorn, writer and curator Giles Waterfield and the former Director of the National Gallery Nicholas Penny. They in turn may invoke curatorial and trade opinions to reach a view on (pre-eminent) quality and valuation. Edward Harley stresses the Panel’s impartiality and rigour, with attendant transparency and fairness for the offeror and nation alike. If

L‘Italienne by Jean-Baptiste Camille Corot has been permanently allocated to the National Gallery

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a chattel lacks (pre-eminent) quality, or is in poor condition, then the Panel will not recommend acceptance. The same impartiality applies to valuation. Hence, even if an offeror has undervalued a work, the Panel will likely suggest an appropriate uplift.

Edward Harley contrasted the arrangements here with, say, those in the US. There, judgements are reached in dialogue solely between the offeror and an acquiring museum. The Panel’s role in the process secures a transparently clear and impartial outcome.

AIL and the CGS have to be publicly funded, which demands Treasury scrutiny but, amid plaudits, Parliament last year increased the budget from £30 million to £40 million. There is nevertheless the potential for tension. Might an offeror at the end of the year find the coffers empty? Might there be competing demands among the four constituents of the UK, or even between AIL and CGS? Edward Harley responds firmly that there is no such tension. The Panel is scrupulous in ensuring that chattels accepted are spread as widely as possible throughout the UK. In practice, the budget has been sufficient for its purpose.

Refinement of AIL

Certain refinements are available in AIL but not CGS. The Panel will, whenever they can, accede to wishes as to allocation under either scheme but a condition is only possible under AIL. Co-owners may between them offer a chattel in lieu of inheritance tax for which they are together liable – though HMRC cannot accept a mere share. CGS is not available to co-owners. Neither is it available to trustees of a settlement. Other refinements in AIL include, in turn, offers in situ, hybrid and multiple:

In situ offer

With in situ there will be a condition of acceptance that the chattels remain in the building in which they have been kept hitherto. While this might raise eyebrows, the underlying purpose is transparently rational. If chattels were commissioned especially for the building, or in the public mind that is where they belong, it might be wholly wrong to remove them to a museum or gallery.

Edward Harley agrees that in situ offers by their nature are likely to be uncommon. Ownership of the chattels would have to transfer to a public collection. Moreover there would be rigorous terms for their preservation, and for extended public access to them, normally of 100 days each year. These arrangements might well deter public collections and owners alike.

On the other hand he points out that much might flow from an established working relationship between an owning family and a public collection. An in situ arrangement might be one manifestation, but so too might be loans to the collection and the facilitation of public access on the family’s premises.

Hybrid offer

With a hybrid the value of the chattel offered will exceed the offeror’s inheritance tax liability. To reconcile this, a public collection can agree effectively to pay the offeror the difference. In return, the offeror will make it a condition of acceptance that allocation is to that collection.

Perhaps unsurprisingly, the institution might be unwilling to commit itself to payment of more than a small percentage by value, but it may club together with other sources of funding to find the money. Besides, the arrangements must be swiftly feasible since HMRC is unlikely to brook long delays while a museum struggles to raise funds.

Edward Harley lauds these arrangements. They have the capacity to bring foremost works into public ownership. He points out too the frequency with which offerors generously forego some, possibly even all, of the sums due to them.

If Edward Harley has a frustration it is with the myth that AIL and CGS are complicated and time-consuming. In themselves emphatically they are not. The record proves this.


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Multiple offer

With a multiple offer, the owner will invite the nation, guided by the AIL Panel, to select and accept chattels of its choice.

While this is a formal process, Edward Harley points out that discussions with prospective offerors can also begin informally at an early stage in the decision-making process. Indeed, the Secretariat to the AIL Panel is very receptive to discussion with owners before they commit themselves to AIL or to CGS (contact details below*). Consultation with the Secretariat at this point has proved to be useful as it can avoid problems caused by the offer of unsuitable objects.

It would be advisable for prospective offerors in lieu of inheritance tax and cultural donors, before contacting the Arts Council, to be reasonably sure that their chattels are likely to satisfy the pre-eminent test. They should also have some idea of the objects’ current values, and the extent of any tax liability which their acceptance might settle.

Before we parted I asked Edward Harley whether, if he could wave a wand over AIL and CGS, what he would hope to achieve. He was in no doubt. He is very keen to see more offers in lieu of inheritance tax, continued growth in the popularity of CGS, and more owners steered in these directions by professional advisers. The market could be fickle while AIL and CGS are more predictable.

If Edward Harley has a frustration it is with the myth that AIL and CGS are complicated and time-consuming. In themselves emphatically they are not and the record proves this.

This is serious food for thought for practitioners. AIL and CGS offer very significant benefits for clients in appropriate circumstances and much can be achieved in discussion prior to any commitment being made.

*Anastasia Tennant, Collections & Cultural Property, Arts Council England, T: +44 (0)20 7268 9553, E: [email protected].

An extract from Nicolas Poussin’s The Death of the Virgin, which has been permanently allocated to the British Museum

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The challenges facing a modern estate

Could you please describe the estate and its main activities?

The estate consists of a Grade I Listed Queen Anne House, which is home to the Lane Fox family. The park and garden is Listed Grade 1 in the English Heritage Register of Parks Gardens and Landscapes. We have a 1,300 acre in-hand arable farm, which is run under a contract farming agreement with a neighbour, six let farms, 1,245 acres of woodland and around 60 houses and cottages.

Aside from this, we have a busy events business and we host the Leeds Festival, Total Warrior and British Military Fitness obstacle course runs, various other runs and events, including weddings and occasional film work. Since the mid-1970s we have run the Equi-Trek Bramham International Horse Trials as an estate business, of which I am now the Director. We have also just built a 1.2 MW anaerobic digestion (AD) plant.

Can you tell us more about the AD plant?

We are constantly looking at what else we can do to maximise returns from the assets of the estate and farming is a major contributor, but also a volatile one. We first looked at an AD plant in 2008, so it has been quite a long journey to fruition, but our plant is now fully functional and exporting electricity. Our basic structure is that the farm sells its produce to the AD plant at the prevailing market rate; both are separate companies, and as such if the farm does well one year the AD plant does less well and vice versa, but Bramham as a whole is protected from the market volatility.

What advice would you give others looking to invest in AD?

One of our priorities was to ensure that the plant was of a size that could be fully ‘serviced’ from our own land, in terms of feedstock (crops we grow) and space to spread the digestate (spent material, which acts like a fertiliser).

Three important considerations would be to:

y Ensure that the whole business model stacks up, bearing in mind the prevailing Feed-in Tariff (FiT) regime. We were lucky enough to build at a time when you could pre-accredit for the FiT.

Nicholas Pritchard is Resident Agent at the 5,400-acre Bramham Park Estate, near Wetherby. Bramham Park is the home of the Lane Fox family and is run as a dynamic modern estate, hosting major events such as the Leeds Festival and the Equi-Trek Bramham International Horse Trials, as well as making major investments in renewable technology. Nicholas very kindly agreed to answer some of our questions about the challenges facing the estate today.


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y Investigate the grid connection in your area; this could be a significant cost, but don’t be afraid to challenge the local power company over their estimates for you to connect to the grid.

y Identify a good operator to run the plant for you, and lastly don’t underestimate how long the project might take!

How do you balance the preservation of heritage with the other activities that the estate undertakes?

Heritage preservation is a key driver for all decisions taken on the estate, and we host events such as the Leeds Festival to allow us to invest in the maintenance of the estate. It is striking a balance between the risk associated with the event/activity and likely reward. We make good use of the grassland in the park, but it is carefully managed and grass is wonderfully resilient.

What are the main challenges of running major public events?

Health and safety has always been a key factor, but is becoming ever more important and consequently time consuming. At the Horse Trials, for example, we employ an

industry expert who is involved during the planning process and is then on-site throughout the event itself.

Detail is probably the next biggest challenge: ensuring that nothing (or as little as possible) has been forgotten or missed. This goes right down to making sure toilets are positioned well and cleaned regularly, that volunteers are thanked, and that contractors all know exactly what is expected of them.

What are the Lane Fox family’s plans for the future?

Nick Lane Fox’s main priority is to leave the estate in a better condition than it was in when he took over.

And finally, what do you enjoy the most about your role?

The variety. Every hour of every day is different. One minute I might be speaking to a tenant about a particular concern, and from there go straight into a conference call with the Austrians who built our AD plant, then into discussions about something relating to the Horse Trials or Leeds Festival, and then to dealing with an internal staffing issue. It’s not all fun and glamorous, but the variety and challenge presented by running Bramham is a real joy.

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Dealing with farming losses and running a successful shoot

We return to our fictional estate owning family, the Summerton-Winters, to find the family concerned by cash flow issues, as the recent spate of very bad weather in the autumn and winter has caused a number of problems on the estate.

Readers will recall that the Summerton Estate has diversified but still retains a number of traditional elements such as the in-hand farming enterprise, let farms, and let residential and commercial property. The estate also opens the house and grounds to the public, and Ted Summerton-Winter’s wedding business is starting to show real prospects of success.

Unfortunately, for Ted’s farm and his tenant farmers, the harvests have not been as successful as they had hoped and poor commodity prices have resulted in substantial losses. Ted’s in-hand farm has now had four successive years of losses and problems are compounded by the fact that his tenants are also struggling to pay their rent. Ted has a good relationship with them; he wants to be as helpful as possible and so has delayed rent reviews and would like to give them a little more time to meet their obligations.

In addition, a number of the estate’s let cottages were flooded when the river burst its banks. Though Ted had comprehensive insurance in place, it is taking some time for the insurance claims to settle and Ted is keen to get the properties habitable once again as the tenants will not pay rent whilst the properties are unlettable.

Ted keeps a close eye on his estate finances and management accounts and also prepares cash flow forecasts so when disaster strikes he is well equipped to manage the issues. He knew, for example, that the farming results might be worse than originally forecast so had revised his forecasts and spoke to his bank manager so he had an extra facility available to draw down on, which he has had to use.

Unfortunately, due to the flooding, the results were worse than anticipated and to ensure credibility with his bankers, he has asked for our help in drawing up a revised all-entity budget with taxes accurately included.

Fortunately, the process of drawing up the budget and cash flow forecast shows that the position is not quite as bad as was first thought, provided certain receipts arrive when they are meant to, such as the Basic Payment Scheme income by late March.

Ted did ask us to confirm that finance costs would be fully tax deductible as they are required to meet business expenses, which we were able to do. However, should the position arise again from April 2017 onwards then Ted may find some of the finance costs restricted to basic rate tax relief where they are attributable to the letting of residential property.

Losses and the ‘hobby farming’ rules

There is one other immediate tax issue for Ted and his farm and that relates to the ‘hobby farming’ rules. These rules prevent sideways loss relief (ie setting losses against other income) in the sixth consecutive year of losses. As Ted has had four consecutive loss-making years, he will need to make a profit within the next two years otherwise future losses will not be able to be set against his other income until he makes a farming profit, when the ‘clock’ will start again. The calculation, however, is reasonably beneficial as it is the tax adjusted loss before any capital allowances are claimed (even though capital allowances might ultimately be claimed).

It is theoretically possible for sideways loss relief to continue into the sixth year (and beyond) if a competent farmer could reasonably expect future profits to be realised. However, it is known that HM Revenue & Customs (HMRC) is notoriously tough in such situations and in the recent First Tier Tribunal case of Silvester v HMRC, the taxpayer lost such a claim, even though in later years while the litigation was ongoing, a profit was in fact realised.


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Ted is, therefore, reviewing his farming strategy, cost control and timing of income receipts so as to make a small profit before capital allowances and not fall foul of the hobby farming rules.

The estate shoot

The estate has always had a relatively small shoot with a modest number of days being available that have always been taken by the family and their friends so it has very

much been a private affair and outside the scope of tax and VAT. However, it shows potential and Ted is now thinking about whether the shoot could be turned into a profit-making enterprise to support the estate.

Ted has been considering a number of commercial aspects, including marketing, commercial charging, cost control and whether the current gamekeeper is up to the task. He wants to understand the tax consequences of making the shoot a commercial one.

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These are numerous issues, but the key matters of advice to Ted are as follows:

VAT

If the shoot is to be commercial, and income exceeds the registration limit, then VAT needs to be considered. If turnover is below the VAT threshold, running the shoot through a separate non-registered structure is worth considering to avoid losing VAT on the market price charged. Otherwise, Ted will have to charge VAT to his customers but would be able to recover VAT on his expenses. Ted does operate a partial exemption method, due to the let properties on the estate, so input VAT recovery will improve slightly.

Ted has also asked us about a ‘shoot syndicate’ as a way of defraying some of his expenses, by the members contributing their share of the costs. If set up and run correctly, a syndicate would not constitute a business and therefore should be outside the scope of VAT, but care is needed with how it is managed.

Income tax

If the shoot makes a profit then Ted will be liable to income tax and National Insurance at the appropriate rate. If losses are made, but the shoot is being operated commercially with a view to profit, then sideways loss relief should be available. The various sideways loss relief capping rules will need to be considered. If Ted spends at least 10 hours per week actively involved in the shoot business his losses will not be limited to £25,000 but they will be capped to the higher of £50,000 or 25% of his total income.

PAYE obligations

Ted will need to take further advice when he has decided how many beaters are needed. Some are already current employees and his PAYE systems are already in place, however if he hires any ‘casual’ beaters, the PAYE and Real Time Information reporting requirements can be onerous and the estate office will need guidance on this.

Inheritance tax relief

The shooting rights of an in-hand shoot operated commercially “with a view to gain” will qualify for Business Property Relief (BPR) at 100%. The land from where the shoot is operated is a mixture of farmland and commercial woodlands. This allows Ted to look more confidently on the whole estate as qualifying for BPR at 100% under the Balfour case. In fact, the shooting figures should help his inheritance tax position, with the farming being so problematic at present.

If Ted decided to maintain the shoot as a private concern, albeit within a syndicate, then the value of the shooting rights may not be significant in themselves and the land should still qualify for full inheritance tax relief given its current use. However, the turnover, profit and management time of running the shoot in a fully commercial way will help with the wider estate succession planning.

Ted, like every other estate owner, has a lot to be dealing with at the moment, so the shooting enterprise will take some time to set up and his priority is very much securing the ongoing viability of the flooded properties and turning around the prospects of his farm. Securing full tax relief on the repair work, sorting out the hobby farming issue and advising on the structuring of the shoot are areas in which his advisers can provide invaluable support.

Ted, like every other estate owner, has a lot to be dealing with at the moment, so the shooting enterprise will take some time to set up and his priority is very much securing the ongoing viability of the flooded properties and turning around the prospects of his farm.


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When selling a business, the last thing a buyer wants to do is pay VAT to the seller. With the standard rate of VAT currently at 20%, such a payment is an unwelcome cost to fund. Even if the VAT could be reclaimed from HM Revenue & Customs (HMRC), later on in the buyer’s VAT return, there is likely to be a cash flow cost.

Thankfully, no VAT is due on the sale of shares in a company or on transfer of a partnership share. Transfer of a Going Concern (TOGC) relief can also mean there is no VAT due on the sale of the trade and assets of a business. TOGC relief is particularly important in the commercial property sector, where a sale of a tenanted building can be treated as a property letting business and obtain TOGC relief.

A working knowledge of TOGC and its potential problems is helpful to anyone who has to deal with these matters as a seller or buyer of business assets.

How do you obtain TOGC relief?

There is a commonly held misconception that every disposal of business assets will qualify as a TOGC. This is simply not true. Where TOGC applies, it is compulsory. Where it does not, the seller may be forced to charge VAT and the buyer forced to pay it. Therefore, clauses in legal agreements referring to the mutual interest of the buyer and seller with statements like “the parties will endeavour to treat the transaction as a TOGC…” are vague and we suggest should be avoided. The TOGC status of the transaction should be established before anything is signed and it is best that the legal agreement deals with VAT in a detailed way so both sides are clear about the VAT position as early as possible.

We see situations where a last minute issue over VAT causes disagreement on other commercial points that it was thought had been settled.

What are the conditions for TOGC treatment?

As noted above, the parties are not able to call a transaction a TOGC when it is not. Rather, it is the seller who is responsible for determining if TOGC relief applies and whether to charge VAT (or not). The seller must consider five key points to decide if TOGC relief can be applied:

1. Is there a transfer?

2. Is there a business or part of a business?

3. Is the business a going concern?

4. Will the buyer carry on using the assets in the business?

5. Have the buyer and seller complied with the formalities of TOGC?

The first point is deceptively easy. There must be a transfer, which means the seller must acquire something. It has been established that a transfer for no payment could also be a TOGC.

Is there a business?

The ‘something acquired’ must be a business, or a part of a business, capable of separate operation, and it is important that the sale is not simply the transfer of a bundle of assets. For example, if you sell a river that is the transfer of an asset not a business. However, if you transfer the river, the boats and huts and customer list, then that is a part of a business.

However, care needs to be taken when undertaking planning to achieve TOGC. A recent tribunal case successfully challenged artificial arrangements where the seller and buyer co-operated to achieve a TOGC.

Is there a going concern?

This has a very broad meaning for VAT purposes. Technically insolvent businesses have been able to meet the test and there is case law to support that there only needs to be a flicker of life in the business for it to be capable of being a TOGC. This can apply to businesses just starting and nearly ending. What is important is that there is some activity

VAT and the ‘Transfer of a Going Concern’

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to evidence there is a live business to be transferred, but nevertheless, care is still needed to ensure the test is met.

Is the buyer carrying on the business?

An important point is how long does the buyer need to carry on the business for TOGC to apply? If the buyer does not operate the business transferred (if for example they were only interested in assets used in the business), there is no TOGC. What if the business is shut down within a week or a month? Predictably, HMRC is reluctant to give any specifics – no doubt concerned about potential abuse of the rules. The period might depend on the character of the business. A month for a property letting business appears too short. A month running a retail shop may well be sufficient.

Formalities, forms, notifications and timings

The formalities of TOGC are all of the various forms and notifications requiring to be made. If the seller is VAT registered, then the buyer must also be, or immediately become, VAT registered as a result of the transfer. Practical issues arise if a VAT registration has been applied for but the VAT number not actually issued by the time of completion. Also, if the seller has opted to tax a property, the buyer will normally be required to also opt to tax that property for TOGC relief to apply.

Notifications must also be given by the buyer in certain circumstances. The required steps must all be completed on or before completion in most cases (or on or before payment of a deposit if it is paid in cleared funds to the seller). Problems can arise if the relevant forms are not signed and submitted to HMRC by the relevant date. For example, the buyer’s option to tax must be made, notified in writing and physically received by HMRC on or before completion (or on or before the payment of a deposit in clear funds to the seller, if this is an earlier date than completion). The nightmare scenario, of course, is that if the TOGC conditions have not been met and HMRC later requires the seller to account for VAT, which would generally result in financial loss, potentially material financial loss.

It is the seller’s responsibility for determining the VAT treatment of the transfer under VAT law, and the nearer to completion, the more nervous they can become on these

points. TOGC relief can still fail if the buyer does not fulfil their obligations. Warranties will generally be required, particularly where the buyer is obligated to do certain things for TOGC relief to apply and the wording of those warranties is very important.

The buyer must only agree to give the warranties if they really are in a position to comply with the TOGC conditions. Plans sometimes change and the buyer needs to be very careful what they are signing up to.

In summary therefore, the primary risk for the VAT treatment of the sale of a trade and assets remains with the seller, as they could be required to charge VAT at a later date if HMRC disagreed that the TOGC conditions had been met. The seller needs to be confident the buyer has, and will, fulfil their TOGC obligations in order not to charge VAT on the sale, typically with suitable warranties given by the buyer who will then need to be confident of what they are signing up to. There is nearly always more to TOGC situations than first meets the eye.

It is the seller’s responsibility for determining the VAT treatment of the transfer under VAT law, and the nearer to completion, the more nervous they can become on these points. TOGC relief can still fail if the buyer does not fulfil their obligations.

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Diversification and the next generation

We spoke to two young successors – Harry Williams-Wynn and Alexander, Viscount Newport, – about the very different diversification projects they are currently tackling.

The regeneration of a grouse moor

In North Wales, close to the Cheshire/Wales border, 27-year-old Harry Williams-Wynn has taken on the not insubstantial task of regenerating Ruabon Moor on his family’s estate, with the aim of returning it to its former glory as one of the UK’s most successful grouse moors.

Extending to around 7,500 acres, Ruabon Moor is both an important wildlife habitat – it is designated a Site of Special Scientific Interest and special area of conservation – as well as having an impeccable pedigree; in its heyday it held the record for the largest amount of red grouse shot in a single

day – some 1,000 – and notable figures including Sir Winston Churchill were regular visitors. It is said that no less than 46,000 grouse were shot in one 10-year period.

The last recorded driven day on the moor was in 1985, though its decline had begun long before then. From the 1960s, investment in the moor declined as did the numbers of grouse, until, according to Harry, you would have struggled to find 10 brace anywhere on the moor.

“In 2007, I visited the moor and did my first walked grouse day, which had not happened for a few years. It was a lovely clear August day and I couldn’t believe the amazing views. On a clear day you can see four counties. My interest in both grouse and in the moor was sparked.

“The following year, I had three months off due to an injury and, unsure what to do with my time, I called Stuart Hart, the longstanding gamekeeper and asked if I could come and give him a hand. It ignited my passion and I asked Stuart what he needed in order to restore the moor, to get it back to how it used to be.”

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The moor had been let since 1995 and was being used for commercial partridge shooting. It was taken back in hand in March 2015, with the aim of focusing on rebuilding the moor’s population of red grouse, a bird on the RSPB’s amber list in terms of conservation importance, indicating a 25% to 49% decline in population over the last 25 years. Harry describes managing the red grouse’s reintroduction as “a bit like tackling a jigsaw puzzle – you have to manage the vegetation, the habitat and the graziers on the moor as well”.

Harry admits he faced an enormous learning curve in terms of getting the moor back into top condition, but under the gamekeeper’s tutelage, he began to pull together the resources they would need. He has also worked hard to build up working relationships with the Game & Wildlife Conservation Trust and RSPB, to get their support.

“We have about 2,500 acres of bracken at present and we sprayed 300 acres this year. The management of bracken is important as it spreads at 3% per year. Dealing with it allows the regrowth of the heather and gives the grouse more room to spread into other areas of the hill. This means that as the population does increase, there will be less competition and therefore more chance of survival.

“We are typically seeing two or three young per hen, but one of our biggest underlying problems is the tick, which hatches at the same time that the chicks do. The tick is spread by animals grazing the common land and whilst the tick is not particularly harmful to the sheep, it is to the grouse. We’ve been doing a lot of work to educate the farmers and we’ve also been putting tick bands on the grouse where we can, but this is both tricky to do and very labour intensive.

“We did not shoot last year, but we are hoping that 2016 will be a big year for us. In 2016 we hope to have the first shooting days on the moor for over thirty years, which would be very exciting. The aim is that in the future we will have a commercially viable business on our hands – it will just take time and continued hard work to get there.”

Indeed, efforts seem to be paying off. Not only is Ruabon’s population of red grouse up to around 2,000 birds, but the moor also now boasts Europe’s second largest population of black grouse, a red list species that the RSPB describes

as globally threatened. Harry’s hard work is of national importance in terms of habitat regeneration and is setting a benchmark for other land owners in terms of what can be achieved with proper management.

Diversification outside the traditional estate

Another young successor, 35-year-old Alexander Newport, is utilising the expertise he has acquired in a successful London career as a chartered surveyor in order to diversify into commercial property; building up a multi-million pound portfolio of trading estates across the UK from borrowing secured against agricultural land on his family’s landed estate.

“About a year ago, I felt that it was an appropriate juncture to look at diversification. As I am a commercial property surveyor and I have a lot of contacts in the industry, this seemed to be the obvious asset class to look at. I also wanted to ensure that any investment we made was done in a tax-efficient way - I didn’t want to have to sell assets, pay capital gains tax or corporation tax, and then use the net proceeds to invest.

“As my family’s estate has very little borrowing against it, the most efficient way to raise funding was to borrow against our agricultural land. I needed to look at an asset class to invest in which produced a handsome arbitrage of up to 4% between the interest rate I can borrow at and the income return yield from the investment.

Not only is Ruabon’s population of red grouse up to around 2,000 birds, but the moor also now boasts Europe’s second largest population of black grouse, a red list species that the RSPB describes as globally threatened.


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“The result was a conservative strategy of investing in multi-let industrial estates, facilitated by securing finance at a very favourable fixed rate over 30 years, from the AMC. I was also fortunate to know Angus Scott Brown of IO, an industrial property asset management business that works with established investors such as The Duke of Westminster’s Grosvenor Estate. IO’s background helped reassure my family estate directors over the investment strategy and gave the venture an immediate track record in the market.”

Alexander describes his acquisition thesis as ‘bottom-up’, which has led to the acquisition of a country-wide portfolio of industrial properties, carefully selected in areas with a positive supply demand balance and comprising multiple units of 1,000 sq ft to 4,000 sq ft.

“We invest opportunistically with no particular location bias, through both widely and privately marketed sale processes. To date, our investments have included: an estate in Rochester, Kent, which will benefit from occupier displacement from Greater London due to redevelopment of former industrial heartlands; and an estate in Clevedon, south of Bristol, close to where the new Hinckley Point C nuclear power station will be located. Both projects have already experienced increased demand from industrial occupiers, with Clevedon seeing 20% rental growth to date.

“We only buy industrial estates that are purpose-built – not properties that have been sub-divided from disused factories and aircraft hangers, for example. Also, the type of property we are targeting can typically be acquired for 25%-30% below replacement costs, which means that to purchase the land and construct a new estate would cost up to 30% more today – effectively ruling out developers from competing until rents rise significantly, which will in turn enhance our existing assets.”

When asked what his future strategy was Alexander said, “We are keen to find co-investors to increase the portfolio size to accord further diversification over more geographies, properties and tenants; provide economies of scale and give greater exit options in the future”.

Despite his relative youth, Alexander is already the managing director of the operating company that controls his family’s 12,000-acre estate in Shropshire and Staffordshire. And though he does have to report to his fellow directors, they are fully supportive of his diversification strategy.

In his professional life, Alexander is a partner in Quadrant Estates, a real estate management platform for institutional investors. Quadrant divested over £450 million of assets under management in 2014, but still has a portfolio of almost £1 billion left– comprising retail, office and residential property.

Despite having so much responsibility, he has been careful not to take his eye off the ball when it comes to his family’s landed estate.

“We have been working to modernise many of our tenanted farms, and we’ve been slowly improving and modernising our residential portfolio – insulating roofs and ensuring properties meet the stringent new energy performance criteria. There are also other opportunities to be explored here. We are fortunate to have a building department on the estate and I am actively trying to expand the 10-strong team to form a stand-alone contracting business.

“One of the drawbacks of investing in the core estate is that if a venture doesn’t work, you cannot easily carve that piece out of the estate and sell it on – you are stuck with the asset. In my view, it can actually be less risky to invest outside the estate, however in order to use bank finance you do need a decent amount of unencumbered security and a robust operating profit from your assets. We are fortunate in not having a large principal house on the estate to pay for and so ours is a more simple business for lenders to understand.”

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The Scottish government is attempting a difficult balancing act. Criticised on the one hand by land reform campaigners as not going nearly far enough, and by mainly private landowners as going too far, it has brought forward a set of measures in 2016 to achieve, in its own words, “a fairer and more equitable distribution of land in Scotland”.

Observers in England and Wales are watching events in Scotland carefully, but it seems that, while the Conservatives maintain their power base, the issue of land reform is off the agenda for them. Nevertheless, ‘southern drift’ is a much-quoted term.

Perhaps the most significant concern for those who believe that the private land owner model in Scotland is delivering significant economic and wider social benefit, is that the land reform changes can only be regarded as one more step in a continuing process. The objective of broadening the spread of ownership of land lies at the heart of left wing policy (the statistic that 432 people own half of Scotland’s private rural land is frequently quoted in political rhetoric as being “indefensible”).

Land reform in Scotland: what does it mean in practice?


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The Land Reform Commission created this time round is going to be a permanent fixture, and so it seems certain that land reform will be back on the legislative agenda. Scottish government Minister Dr Aileen Macleod said that “community ownership may not be appropriate for all land”, which is hardly generous as an expression of confidence in the private landowner model given the target of having 1 million acres in Scotland owned by communities by 2020 – a target that seems highly ambitious.

Does all of the uncertainty mean that Scotland is now off limits to international buyers of sporting estates or those mixed estates with significant tenanted land? The evidence seems to be that political uncertainty has dampened the sporting estate market, but some transactions are happening, albeit at somewhat depressed prices per stag/salmon/grouse.

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Agricultural land, on the other hand, is still demanded, albeit at a discount to land south of the border, and sources suggest that buyers do not see the land reform agenda as a threat to their aspirations. Becoming tax resident in Scotland might, however, be an issue depending on what happens in December 2016 to Scottish income tax rates for 2017-18.

Certain proposals recommended by the Land Reform Review Group, such as imposing a limit on the amount of land that any individual or entity can own, were rejected by politicians. However, there is no guarantee that they are permanently off the agenda.

The impact on rural private land ownership

There is going to be a right for a community to buy land for “sustainable development”. At risk is land not actually used, eg derelict housing sites, unfarmed areas and those areas highly demanded for things like football pitches, being at highest risk. Landowners need to be careful to ensure that they can defend current land use as being sustainable, with business plans and evidence of activity.

The buy-out measure is clearly designed to enable a community to develop, where it is being held back by neighbouring or surrounding land ownership. For example, where there is a clearly defined community, such as an island, being frustrated by the inactivity of those who own the land. But in many situations, whilst the measure might seem unpalatable, the community interest could well be unstructured, and where it does exist strong proposals will be required to back the community’s case. It will also have to find the funds and may of course be faced with legal challenge. As proposed legislation it might seem somewhat draconian, but in practice will it actually see large volumes of land changing hands? What this legislation should do is encourage landowners to consider how they use their land, particularly in edge of town situations where development opportunities exist. The Land Reform Scotland Act 2003 gave communities the right to buy land when it came onto the market – to have, in effect, first refusal. But has it been that successful thus far? Judging by the very low number of buy-outs and anecdotal feedback of those that have gone through, the answer appears to be no.

Certain proposals recommended by the Land Reform Review Group, such as imposing a limit on the amount of land that any individual or entity can own, were rejected by politicians. However, there is no guarantee that they are permanently off the agenda.

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Agricultural Holdings Legislation at the time of writing has rejected the tenant’s “absolute right to buy”. The tenanted sector has been supported with significantly extended succession rights for secure tenants (a high proportion of whom statistically are over 60 years old), and there is planned the ability for a tenant to exit with dignity by selling to the landlord at 25% of vacant possession value or, failing this, to assign to a new third party tenant under a “modern limited duration” tenancy (of at least 10 years’ length) replacing the much-criticised limited duration tenancy. Rent reviews are to be modernized and worked out on “productive capacity”. It remains to be seen if this encourages more owners to let land, as the risk/reward balance has hitherto favoured in-hand farming. But with commodity prices so volatile and low, perhaps some in-hand farmers will see lower risk letting as a better deal.

A big question is whether estate owners will decide to pay up 25% of the vacant possession value to gain control of land. Some see this change as forcing their hand, when a natural course of events under the old regime may well have seen the tenancy revert back to the owner.

Sporting estates

The other big issue is the reintroduction of business rates for shooting and stalking. This is targeted at larger businesses, with smaller businesses (farm-scale shoots) likely to be covered by the current small business rates exemption. The rating will apply to valuations at April 2015 for introduction in 2017 and will likely apply on rateable value, ignoring actual numbers shot.

The measure to lift the exemption on sporting rates equally proposes putting things back to as they were pre-1995 when shoots and deer forests paid rates in line with other business uses. However, times have changed and whilst the proposal appears simple, its implementation may be significantly more complex. For a start, all properties with deer on them would need to be assessed and distinction made between management and sport. Now, management has also gained considerable traction – indeed there is a parallel expectation from government and its agencies for

Scotland’s deer to be managed sustainably, hence the Code of Deer Management, the 20 year vision entitled Scotland’s Wild Deer: A Natural Approach.

Many properties would retain exemption from rates anyway as falling under the small business threshold of £10,000, but they will require assessment first in order to claim such exemption. The risk is that what is an archaic rating system may be applied to a sector that is quite dynamic and generates much urban to rural wealth transfer (townies buying sporting, accommodation, food and drink etc) as well as jobs and local community support.

It will be an expensive and lengthy process for government and the local authorities to arrive at a point where they will actually be collecting any revenue from sporting rates. If done correctly, the measure may settle down and the cost be accepted by sporting owners and managers. However, it would be ironic if the rating of shooting and stalking ultimately penalises what is already a well-established sector that provides jobs and generates wealth that is often ‘ploughed back’ into the local economy by private owners. Why discourage owners who already apply externally generated wealth to loss making enterprises, largely for the love of it?

Good land ownership and good land management practice in Scotland should not be under threat from this proposed legislation but the situation needs very careful watching over time.

So does the proposed legislation carry a huge threat? Owners who manage their land well, and who engage with local communities, as many already do, are unlikely to feel the lash of major change. There is an underlying agenda for more land in Scotland to be owned by more people and this round of land reform legislation attempts to move that process forward. Private landowners should respond by managing their land even better. At times, that may feel like a double edged sword. However, demonstrating to the political masters of the day the merits of the private ownership model (jobs, investment, community engagement, innovation etc), is surely the right way forward.

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Succession and inheritance tax

One of the key aims of most landowners is the ability to pass their estate to the next generation in such a manner that ensures its long-term viability. Inheritance tax planning forms a major part of any such strategy.

All too often, inheritance tax planning is left too late in the day. This often results in the estate owner having to employ more aggressive planning strategies with greater risks attached to them.

The inheritance tax position of an estate can change from year to year and it is vital that it is kept under constant review to ensure that all appropriate tax reliefs are maximised. It is never too early to start planning for the future. For those looking to purchase an estate there is some merit in having one eye on inheritance tax from the outset when choosing the most appropriate vehicles to be used to make the purchase. It is far simpler to have everything set up correctly from the start, rather than having to reorganise the position at a later date, which may lead to an immediate tax cost.

Available reliefs

The two main reliefs that need to be considered when looking at succession planning are Agricultural Property Relief (APR) and Business Property Relief (BPR). These often work in concert with each other, with APR given in priority.

The business of a typical estate is generally made up of a number of different activities. These often include an in-hand farming operation, commercial woodland, let farmland, let cottages and industrial units, shooting, fishing and renewable energy projects.

The availability of reliefs from inheritance tax will depend on the ownership and usage of each of the assets that comprise the estate.

Agricultural Property Relief

In simple terms, the agricultural operations of an estate will generally qualify for APR at either a 50% or 100% rate. The owner will either have to own the land and farm himself for two years to qualify, or own the land for seven years with someone else in agricultural occupation.

One of the major limitations to the relief is that it is restricted to the agricultural value and so does not cover any ‘hope value’ (ie future development potential) that might be inherent in the land and buildings. This is also a relief, certainly in relation to let land, which has often been flagged as being potentially open to attack by successive governments.

It is for these reasons that it is a safer option to look to BPR to protect an estate’s assets.

Business Property Relief

The main asset classes, in an estate context, that qualify for BPR are a business or an interest in a business, including a partnership interest or shares in an unquoted trading company. The rate of relief is again either 50% or 100%, depending on how the business is structured and the assets are held.

There are certain restrictions on what type of business will qualify for relief. These restrictions apply to businesses that are:

1. Wholly or mainly engaged in the dealing in securities or land or buildings; or

2. The making or holding of investments.

It is the second excluded business which generally causes the most problems as far as an estate is concerned. As mentioned above, the typical estate includes a number of different activities. The in-hand activities of farming for example would not be considered an investment activity. On the other hand, the letting of residential properties would be.

Therefore, an estate’s businesses have to be reviewed on an annual basis to ascertain whether or not the investment


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activities form the majority, or whether the trading side predominates. If trading comes out on top, then the whole value of the estate, including investment properties, will potentially qualify for BPR. Conversely, if holding investments is considered the main activity, then no relief will be available on any of the assets.

This concept has been reviewed by the Courts over a number of years and their decisions have led to a set of four empirical tests which can be employed to give a steer as to the nature of the overall business.

The tests require a review of the turnover, profits, time spent and capital employed (acreage and value) of both the trading and investment activities of the estate. None of these tests are determinative in isolation but if all four favour trading then the case for BPR is stronger. The results may also change on an annual basis and so it is important to review them over a reasonable period of years.

There is a final subjective test to be employed which requires you to stand back and review the estate as a whole in its overall context.

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The key point to take from this is that if an estate is run as one business, and the investment activities predominate, then BPR will be lost on the trading elements of that business. BPR is an ‘all or nothing’ relief. If that business includes farming, then APR should help ease the inheritance tax burden somewhat. If, however, there is a valuable shoot or commercial woodland business, or indeed development land where the value is in excess of the agricultural value, APR will not be of assistance and the estate could face a 40% tax charge on its full non-agricultural value.

Purchasing an estate

Subject to the necessary information being available, any potential purchaser of an estate would be wise to look at the above tests when considering the most appropriate entities to make the purchase. If it is clear from the outset that the investment activities will predominate then it may be sensible to split the ownership between different family members or, indeed, to use a partnership or company to own a part of the estate.

Clearly, there are many other factors that need to be taken into account in making such a decision but certainly the inheritance tax position should be on that list.

Passing on an estate

Looking at the reliefs above is important when considering the inheritance tax position of an individual on their death, or indeed on a lifetime transfer into trust.

Many estate owners, however, will also come to a point where they wish to take a step back from the day-to-day running of the business and introduce the next generation. As part of ensuring the next generation’s buy-in, lifetime transfers are often considered.

From an inheritance tax perspective, it is important to understand whether APR/BPR would be available to the estate at that point. If the transfer is made to an individual then the gift itself would not have an immediate inheritance tax consequence, but if the owner were to die within seven years, there could then be a potential charge if the estate would not have qualified for relief at the point the gift was made.

Of more immediate concern, however, is the capital gains tax position on making the gift. Such a transfer is an occasion of charge for capital gains tax purposes and, regardless of the fact that no proceeds are received, the gain is based on the market value of the asset gifted.

If the gift is made to an individual then there is a valuable capital gains tax relief available if certain conditions are met. Very broadly, most assets used in the trading element of the business will qualify for the relief, which effectively defers the capital gain arising, with the recipient receiving the assets at their historic base cost. The same is true of assets which would qualify for APR.

If the asset being transferred would not qualify for APR, or is not being used in the trade, then a gift to a trust might then be the appropriate option. A similar relief, deferring the capital gain arising, would then potentially be available, albeit that the inheritance tax position would have to be carefully considered to ensure that no immediate charge arises.

The key to any successful succession strategy relies on ensuring that an estate qualifies for the various reliefs highlighted above. This requires annual consideration given the ever-changing nature of an estate business. It is important to start any planning as early as possible, even before the purchase of an estate by a new owner.

When properly implemented, however, this will ensure that the estate can be passed from generation to generation without the burden of large tax charges along the way.

If an estate is run as one business, and the investment activities predominate, then Business Property Relief (BPR) will be lost on the trading elements of that business. BPR is an ‘all or nothing’ relief.


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The variation of trusts

There are a number of reasons why it might be desirable to change the terms of a trust. Frequently, the variation of an existing settlement is required by changes in family/dynastic circumstances (for example divorce), administrative concerns (for example restrictions on powers of investment) or the imminent expiration of the trust period or a valuable power of accumulation.

Since 2006 it is, ordinarily, preferable to vary or extend the terms of an existing settlement rather than to create a new settlement, since the effect of the UK tax regime is now that both the termination of an existing settlement and/or the creation of a new settlement can be very expensive from a tax perspective.

There are three principal methods which can be used to vary the terms of a settlement without the intervention of the Court:

y Powers of appointment or advancement can be used, but subject to the limitation that such powers cannot be exercised in such a manner as to infringe the rule against perpetuities (broadly, how long the trust can exist for) (see Pilkington v IRC [1964] 612 at 641 per Lord Radcliffe);

y The ultimate remainderman can resettle his reversionary interest, but this entails various difficulties from a capital tax perspective; and

y Under the rule in Saunders v Vautier (1841) Cr & Ph 240 the beneficiaries of a settlement can collectively direct the trustees to hold the trust property on new trusts provided that they can only do so where all the possible and potential beneficiaries are in being, adult and have legal capacity, which frequently renders this impossible.

The practical and fiscal limitations as to what can be achieved in restructuring a settlement by these three

James Rivett, a barrister with particular interest in taxation issues relating to heritage and cultural property, explains the increasing importance of the Variation of Trusts Act 1958.

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methods frequently make them unattractive, particularly if a substantive revision or extension to the terms of an existing trust is required.

A more effective solution is often to make an application to the High Court for the variation of the terms of the settlement under the Variation of Trusts Act 1958, which provides a statutory extension to the consent principle embodied in the rule in Saunders v Vautier, enabling the Court to approve particular arrangements on behalf of beneficiaries who cannot otherwise consent through want of capacity (typically minor, unborn or unascertained beneficiaries). In recent years, such applications have become increasingly popular as a means, in particular, of extending the lifetime of an existing settlement beyond its original lifetime (perpetuity period) and of providing trustees with new and modern powers, including long-lasting powers to accumulate the income of a fund (often an invaluable tool for paying tax charges). The introduction of the Perpetuities and Accumulations Act 2009, which now enables property to be held on trusts with a perpetuity period of 125 years, and for income to be accumulated throughout that extended period, have only increased the popularity of such applications as an efficient means of preserving family trust structures.

Perhaps the most attractive aspect of an application to the High Court under the Variation of Trusts Act 1958, is the comfort that, provided the terms of a proposed arrangement are carefully drafted to avoid the creation of a new settlement, the arrangement should not involve the adverse tax risks which can apply upon other methods of varying the terms of a settlement. The biggest risk is that the variation involves a deemed disposal of the trust fund for the purposes of capital gains tax code and/or the disturbance of a pre-2006 interest in possession for the purposes of the inheritance tax code (see Wyndham v Egremont [2009] EWHC 2076 (Ch)). A recent public exchange of correspondence between the ICAEW and HM Revenue & Customs (HMRC) (released on 27 October 2015) makes plain that HMRC accepts that a properly drafted and promoted arrangement made under the Variation of Trusts Act 1958 can achieve, without incidence of taxation, a variation of an existing trust that might otherwise be expensive from a tax perspective.

There are no prescribed rules as to who may bring proceedings under the Variation of Trusts Act 1958, save that both the settlor (see the Civil Procedure rules 1998, Sch. 1, RSC Ord. 93, r. 6(2)) and the trustees should be made party to the claim, since they occupy a watchdog role for those persons on whose behalf the Court is asked to approve an arrangement under the 1958 Act (Re Steed’s Will Trusts [1960] Ch 407). Ordinarily, any minor on whose behalf the Court is asked to approve an arrangement, is made party to the proceedings (in practice represented before the Court by a litigation friend), together with each competent adult beneficiary of the settlement (the ordinary method is for adult beneficiaries to simply convey to the Court their consent to the arrangement through the trustees). Typically one set of solicitors will act for all parties, with separate individuals within the firm nominated to accept instructions on behalf of parties with different interests.

The basic principle of open justice is such that applications under the Variation of Trusts Act 1958 are, in the ordinary course, heard in public. In appropriate cases, however, the Court will impose reporting safeguards and restrictions on access to Court papers which prevent non-parties from having access to materials in support of the application, if such access might adversely affect the wellbeing of minor and unborn beneficiaries. In V v T and A [2014] EWHC 3242 (Ch) Morgan J imposed heavy restrictions on access to Court papers to protect minor beneficiaries from public knowledge as to the extent of their expectations under the family settlements there in question.

The number of trusts created in the middle of the twentieth century makes it likely that, in the next few years, large numbers of trusts will approach the end of their original trust periods. The fiscal expense involved in the termination of an existing settlement and a resettlement are likely to mean that serious consideration should be given to an application to extend the existing settlement under the Variation of Trusts Act 1958.

James Rivett is a barrister practising at Pump Court Tax Chambers. James specialises in all forms of taxation, but has a particular interest in taxation issues relating to heritage and cultural property. Ranked as a Leading Junior in the field of Private Client work by the Legal 500, and Chambers and Partners, James won ‘Tax Junior of the Year’ at the Chambers and Partners Bar Awards 2014.


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Our landed estates team

The firm is regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. Saffery Champness is a member of Nexia International, a worldwide network of independent accounting and consulting firms. No responsibility for loss occasioned to any person acting on or refraining from action as a result of the material in this publication can be accepted by Saffery Champness. © Saffery Champness February 2016. J6116.

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Our specialisms include:

• Succession planning

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by a national team of over 80 staff who have the

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Documents

Landed Estates Annual Review 2016 - Saffery Champness€¦ · Landed Estates Annual Review 2016 3 It is true that CGS doesn’t offer quite the monetary benefit of AIL, which in practice