A person can leave up to £325,000 to friends and family free of inheritance tax, but any excess above this figure may be subject to inheritance tax at a rate of 40%.  This allowance, called the “nil rate band”, relates to the amount left to beneficiaries other than a spouse (or registered civil partner) or charities.   Assets that pass to spouses (or registered civil partners) or charities are free of inheritance regardless of what those assets are worth.

There has recently been a change in the law to provide that if you leave to charity at least 10% of that part of your estate that would otherwise be chargeable to tax, the rate of inheritance tax should be reduced to 36%.   However, the provisions only apply on death and are complicated.   In particular, in calculating the 10%, you ignore that part of the estate that is covered by the nil rate band.

If you wish to do so, you can include a clause in your will to provide that 10% of your estate (or more) should pass to one or more named charities.   However, the rules are not straightforward, and any such clause needs to be carefully drafted.

If someone has died on or after 6 April 2012 and the beneficiaries under the will wish to take advantage of the lower rate, they can give the necessary extra money out of the funds they receive from the estate to charity.  However, in order to take advantage of the reduced rate, they also need to sign a document known as a deed to provide that for inheritance tax purposes the extra money should be deemed to have been paid directly out of the deceased’s estate.   In that way, the estate will then become eligible for the reduced rate of inheritance tax.

If you require further information on this topic, please contact us at wills@leedsday.co.uk.

For more general information about inheritance tax, please visit “Wills and estate planning – inheritance tax planning”.

 Divorces are often heralded as being nasty, brutish and all too long; not to mention expensive.  It doesn’t have to be that way.

Divorce and separation is sadly increasing, the current financial squeeze on families often being the final blow.  It might seem to make little sense to spend money on lawyers if you are going through a divorce, but getting it wrong and relying on the myriad of misinformation offered both on line and by well meaning friends can lead to considerably greater costs.

The Good News

At Leeds Day, we offer a variety of alternatives to reduce those costs.

If you remain on relatively good terms with your spouse, family mediation may be a good option.  You and your spouse see our mediator trained in conflict resolution and family law to oversee discussions.  Our mediator can advise you about potential financial and childcare arrangements, helping to keep discussions on track if they become strained on certain aspects.  You and your spouse/ may still retain lawyers to guide you, review the final settlement and prepare the papers for Court but you would not need to attend Court at all.

Collaborative family law is similar, and an increasingly popular approach to divorce.  During collaborative negotiations, you and your spouse instruct lawyers, but they will be committed to resolving your differences without resorting to litigation through a series of meetings.

Even If neither of the above suit your circumstances, we are able to negotiate with your spouse or his or her lawyer, with our aim remaining the same; to reach a settlement that is best for you and avoid the costly and lengthy process of Court proceedings.

Our team includes accredited members of Resolution and we can offer mediation or collaborative family law as alternatives to more traditional forms of negotiation.  You will be in expert hands.

 How much will it cost?

Whichever route you choose to take, we will advise you of the likely cost.  We offer fixed fees for a number of our services so that you know right from the outset which option works best for you, how much it will cost and how long the process will take.

To find our more, contact us on 01480 464600 or send us an email to family@leedsday.co.uk.  Further details of the services we provide can also be found on our website, www.leedsday.co.uk.

 Is it true what they say – that it is not divorce itself, but the way you divorce, that takes the heaviest toll? St. Neots lawyer Simon Thomas certainly believes so.  Simon is one of a pioneering group of solicitors across the country who offer a whole new way of making the break, and surviving the aftermath.

Collaborative law is an exciting innovation which has swept the US and is gaining hold in England. Cambridge has been one of the leading cities in England with most firms offering family advice also offering the opportunity to collaborate. It was only a matter of time before the good news spread. Simon is one of a growing number of family lawyers able to offer this alternative to the more traditional approach when dealing with separation.

It is a sad fact of life that, but divorce is here to stay. The most recent statistics suggest that almost half of marriages in the UK will end in failure. The real cost of a marriage breakdown (or, for that matter, any relationship breakdown) is not just financial but the personal and emotional turmoil that so often accompanies the end of relationships. A bad divorce can leave lasting scars, not just on the main protagonists, but on their children and extended family and support network too.

Collaborative practice provides the possibility for separating couples to work together as a team with trained professionals to resolve disputes respectfully and without going to Court. It is an approach to problem solving which maximises the options and minimises the friction of the people concerned.

Each client has the support, protection and guidance of his or her own lawyer. Together, the lawyers and clients form the collaborative component of collaborative practice. The crucial difference between collaborative law and the more traditional way of lawyers dealing with a divorce is that the lawyers agree they are there to help the clients through the collaborative process; they are not there to take the case to Court and are prevented from doing so. If an agreed outcome cannot be reached then the two lawyers involved must bow out. Neither of then can be involved in subsequent litigation for the couple. With your former partner, you set the agenda. You work at the pace at which you feel comfortable. You commit to full disclosure and all talk openly about the issues that matter to you. You don’t feel as if you are being dragged helplessly along a legal conveyor belt.

One of the other key features of the process is the possibility of joint reference to financial and other experts who may need to be involved; especially in complex cases. The parties can meet individually or together with an accountant who understands the basis of the process, and the accountant could provide the summary of the necessary financial information.

Collaborative law is not an easy option; it requires the right mindset from everyone involved but for couples for whom it is right, it provides a genuine resolution to marital breakdown or the breakdown of a civil partnership or relationship and those who come out the other end report a genuine since of well being. Many successfully remain friends with their former partners, in an atmosphere of respect and understanding which, they say, at the beginning of the process they could never have contemplated.

To find out more about collaborative family law contact the family team at family@leedsday.co.uk or Simon Thomas at Leeds Day on 01480 454301, or visit our website www.leedsday.co.uk

 As part of the Government cut backs, legal aid will all but disappear for divorcing or separating couples. From 1 April 2013, parties on a low income who are separating and need legal help to resolve their financial disputes or child arrangements are unlikely to be entitled to legal aid (which did provide free or reduced cost advice). This means that each party may have to face court proceedings alone without the advice and assistance of a lawyer or incur legal fees they cannot afford to pay.

However, legal aid for people on a low income is continuing for Family Mediation.  Leeds Day is the only firm of solicitors in Huntingdon, St Neots and St Ives able to offer Family Mediation with legal aid.  Our resident mediator, Abby Smith is accredited and approved by the Law Society, Legal Services Commission and Resolution to undertake mediations on a legal aid basis (and also on a private paying basis for those not eligible for legal aid).

How does family mediation work?

Our mediator will meet with you both for a series of sessions in which you will be helped to:

•  Identify  all the matters you wish to consider
• Collect the necessary information – mediation requires you both to be open and honest about your financial circumstances in order to achieve an outcome which is fair to you both
• Talk about the choices open to you
• Negotiate with each other to reach decisions that are acceptable to you both
• Discuss how you can talk with your children appropriately about the arrangements

 What does a family mediator do?

A mediator’s job is to act as an impartial third party and manage the process, helping you to exchange information, ideas and feelings constructively and ensuring you make informed decisions. A family mediator has no power to impose a settlement – responsibility for all decisions remains with yourselves since you know better than anyone else what is right for your family.  Our family mediator can provide legal information and guidance, but not individual advice, as a family mediator must remain independent at all times.

Will I receive anything in writing?

Yes. Once an agreement is reached this is recorded in writing for each party to then discuss with their legal advisor.

What is the cost?

All the above is covered by legal aid for Family Mediation.  Therefore, separation does not have to cause financial hardship. In addition to offering legal aid to those on a low income, at Leeds Day we offer Family Mediation to those who would not qualify and so need to pay privately. Whilst there is then a cost for the parties for this service, Family Mediation remains much cheaper and more cost effective than proceeding through the more “traditional” route of instructing solicitors and proceeding through the courts.

Is mediation suitable for everyone?

Sometimes mediation is not the best way for you to resolve your problems and we understand “one size does not fit all”.  You will have a chance to discuss this in more detail at your individual consultation with our family mediator.

Abby is available to meet Family Mediation clients at any of our three offices in Huntingdon, St Neots or St Ives.

For further information about the Leeds Day Family Mediation Service, contact us by telephone on 01480 454301 or by email, family@leedsday.co.uk or have a look at the information on our website www.leedsday.co.uk/family

Consumer contracts are governed by an extensive body of consumer protection law which aims to provide consumers with rights that cannot be taken away. The principal consumer protection rules are found in:

• Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008 (SI 2008/1816) (Doorstep Regulations).
• Consumer Protection (Distance Selling) Regulations 2000 (SI 2000/2334) (Distance Selling Regulations).
• Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277) (Consumer Protection Regulations).
• Sale of Goods Act 1979 (which includes certain consumer remedies brought about by the amending Sale and Supply of Goods to Consumers Regulations 2002 (SI 2002/3045) (SSGCR) which implemented Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees (Sales and Guarantees Directive)).
• Supply of Goods and Services Act 1982 (which includes certain consumer remedies for transferred goods brought about by the SSGCR) (SGSA).
• Unfair Contract Terms Act 1977 (UCTA).
• Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (UTCCRs).

Rights when buying goods and services

Implied terms in contracts for sale of goods

The SGA implies certain terms into a contract for the sale of goods. These are classified as conditions under contract law. Goods must:

• Come with good title (section 12, SGA). (Also implied are the warranties of quiet possession and freedom from encumbrances).
• Correspond with their description (section 13). For example, a dish that is described as “ovenproof”, but shatters when used under the normal conditions for making a casserole, has been misdescribed and would not conform to the contract.
• Be of satisfactory quality (section 14(2)). Quality includes:
  • state, condition and fitness for all purposes for which goods of that kind are commonly supplied;
  • appearance and finish;
  • freedom from minor defects;
  • safety; and
  • durability.

  A seller may be protected if they specifically draw unsatisfactory quality to the consumer’s attention before the contract is made, or if the consumer examines the goods before the contract is made and finds (or should have found) a defect (section 14(2C))

Public statements to consumers about the characteristics of a product (especially in advertising or on labelling) are also relevant to whether goods are of satisfactory quality: they must be factually correct and form part of the seller’s contract with the consumer (section 14(2D), SGA). However, sellers have a defence if they can show that:

• They were not aware of the statement for good reason.
• The statement had been corrected in public before the conclusion of the sale.
• The decision to buy the goods could not have been influenced by the statement.

(Section 14(2E), SGA.)

A consumer benefits from a six month presumption under section 48A(3) of the SGA where he wishes to rely on one of the EU remedies introduced into the SGA by the SSGCR. It will be presumed that for the first six months after delivery the goods were inherently defective at the point of delivery. However, after this six month period, the burden of proof is reversed and a consumer will have to show that the goods were defective at the time of delivery, which may be difficult to prove.

Although it is not statutory guidance and is not a definitive indication of how the courts would treat the issue, according to the guidance from the Department of Business, Innovation and Skills (BIS), A trader’s guide: the law relating to the supply of goods and services (the BIS Guidance), a consumer cannot hold a seller responsible for:

• Fair wear and tear.
• Misuse or accidental damage by the consumer.
• Where consumers have  tried their own repair or had someone else attempt a repair, and this has damaged the goods.

A seller cannot exclude, or restrict liability for the breach of, these implied terms in consumer contracts (section 6, UCTA).

Remedies: goods

In a contract for the sale of goods, a consumer has certain remedies when goods do not conform with the contract for sale. The first two are common law remedies and the remainder were introduced into the SGA by the Sale and Supply of Goods to Consumers Regulations 2002 (SI 2002/3045) (SSGCR), to implement the Directive on certain aspects of the sale of consumer goods and associated guarantees (99/44/EC). The existence of parallel regimes makes it difficult for consumers and retailers to understand the law, and can lead to unnecessary disputes.

The relationship between these regimes has been scrutinised, and criticised, by the Law Commissions’ in their report on Consumer Remedies for Faulty Goods in 2009.

Common law remedies for goods

Rejection. Consumers can reject goods and require their money back as long as they complain within a reasonable time. “Reasonable time” is not defined the SGA, but a consumer will need time to examine goods to check that they are satisfactory (section 35(2), SGA). A court will decide what is a reasonable time, taking into account all the circumstances. A consumer will lose this right to reject if he “accepts” the goods.

Damages. Buyers can claim damages, which will generally equate to the cost of repair or replacement of the goods, and they may also be able to claim compensation for damage caused by faulty goods, depending on the facts. Buyers may struggle to successfully claim for consequential losses such as distress, inconvenience or disappointment. If buyers have accepted the goods, their only remedy is damages.

Acceptance

Section 11(4) of the SGA states:

“where a contract of sale is not severable and the buyer has accepted the goods or part of them, the breach of condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the goods as repudiated, unless there is an express or implied term of the contract to that effect.”

A buyer who has accepted the goods can only sue for damages, so it is important to know when acceptance has occurred. The buyer’s right to examine the goods and acceptance are governed by sections 34 and 35 of the SGA, and can occur in three ways:

• By intimation to the seller that the consumer has accepted the goods. Consumers must have a reasonable opportunity to examine the goods, so even if they have signed a delivery note, they will not be deemed to have accepted them (section 35(1)(a)).
• Through an act after delivery inconsistent with the seller’s ownership (section 35(1)(b)).
• By retention of the goods beyond a reasonable time. What is reasonable is a question of fact and whether the consumer has had a reasonable opportunity to examine the goods must also be considered (section 35(4)). Unfortunately, case law to date on what amounts to a reasonable time provides little guidance on how long this period lasts. The Scottish Court of Session found in David Douglas v Glenvarigill Company Limited [2010] CSOH 14 that a period of 15 months was too long to permit rejection for a latent defect in a car and awarded damages instead.

Time limits for bringing claims

The time limit for contractual claims is six years under section 5 of the Limitation Act 1980. The six-year period runs from when the breach of contract occurred, which, in practice, is taken to be the date on which the goods were provided. However, this time limit depends on the goods in question and does not mean that goods have to last for this length of time.

Where a consumer wishes to rely on one of the EU remedies in section 48A for defective goods, he benefits from a six month presumption that the goods were defective on delivery (section 48A(3) ). This means the consumer does not have to prove the defect was in the goods when delivered for this period. However, after this time, the burden of proof is reversed and a consumer will have to show that the goods were defective at the time of delivery, which may be difficult to prove in practice.

Minimising losses

There is a general duty under contract law to take reasonable steps to mitigate a loss. (The BIS Guidance also states that consumers should act reasonably when seeking redress and should not add unnecessary costs.) Consequently, a consumer should:

• Report faults as soon as possible, to make it easier for to show that the goods were inherently faulty at the point of sale, and to prevent the goods from deteriorating further.
• Service goods as appropriate, follow user instructions and look after them, so that a consumer does not contribute to any existing or inherent fault.

Consumers may be able to claim damages if they suffer loss as a direct consequence of a product being faulty.

Additional remedies where selling at a distance

If goods are sold by distance means (for example, mobile phone, e-mail, web, telephone, fax or interactive television), sellers need to comply with the Distance Selling Regulations.

There are four main obligations on sellers of goods and services by distance means. They are:

• To provide up-front information to consumers before the contract is concluded.
• To provide certain information to consumers before the delivery of the goods or supply of the services requested.
• To commit to delivering the goods and/or services within 30 days.
• To provide a seven (working) day cooling-off period, during which consumers can withdraw from the contract without penalty and without giving a reason. The start date for this period differs between contracts for goods and contracts for services, and when the relevant information was provided by the seller. The only charge that can be made to consumers for exercising their rights is the direct cost of returning the goods. If the trader does not give consumers details about their right to cancel the contract, the period is extended from seven days to three months.

There are certain exceptions to the rules, such as the supply of products that, by their nature, may not be returned (such as perishable food) or bespoke products

Unfair commercial practices

The Consumer Protection Regulations implement the Unfair Commercial Practices Directive (2005/29/EC) into UK law. Broadly, the Consumer Protection Regulations prohibit unfair commercial practices, such as misleading or aggressive practices. Unfair commercial practices are a criminal offence under regulation 3(1) of the Consumer Protection Regulations.

The Consumer Protection Regulations are enforced by the OFT and Trading Standards. Consumers do not have a direct right of action against sellers under the Consumer Protection Regulations. In March 2012, the Law Commission and the Scottish Law Commission recommended providing consumers with a new direct civil right against a trader for misleading or aggressive practices

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Charitable incorporated organisations (CIOs) are a new corporate structure designed specifically and exclusively for charities.

They will be an alternative to the current legal structures for charities, such as charitable companies (usually companies limited by guarantee), charitable trusts and charitable unincorporated associations.

CIOs will be registered with and regulated by the Charity Commission but, unlike charitable companies, CIOs will not also be required to register with, or be regulated by, the Registrar of Companies.

Like all corporate structures, CIOs will have a separate legal personality allowing them to contract and hold property in their own name and, like limited companies, their charity trustees and members will benefit from limited personal liability.

Who will the CIO appeal to?

It is generally thought that the new CIO structure will appeal to medium-sized unincorporated charities (that is a charitable trust or charitable unincorporated association) which employ staff and/or enter into contracts, although the new structure will impose more regulation and registration requirements on them. Charitable companies may wish to convert to a CIO to benefit from the reduced regulation and administration.

CIO Regulations and Order made

On 5 December 2012, the following statutory instruments necessary to complete the legal framework for the CIO were signed (or “made”) by Nick Hurd, Minister for Civil Society:

• Charitable Incorporated Organisations (General) Regulations 2012 (SI 2012/3012) (General Regulations). An explanatory memorandum has been published, see Explanatory memorandum to the Charitable Incorporated Organisations (General) Regulations 2012 (SI 2012/3012).
• Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012 (SI 2012/3013) (Insolvency and Dissolution Regulations). An explanatory memorandum has been published, see Explanatory memorandum to the Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012 (SI 2012/3013).
• Charitable Incorporated Organisations (Consequential Amendments) Order 2012 (SI 2012/3014) (Consequential Amendments Order). An explanatory memorandum has been published, see Explanatory memorandum to the Charitable Incorporated Organisations (Consequential Amendments) Order 2012 (SI 2012/3014).

The next step in implementing the CIO will be for the Minister for Civil Society to make the Charities Act 2011 (Commencement No.1) Order 2012 to bring into force most of the relevant provisions of ChA 2011.

However, the provisions that enable existing charitable companies limited by guarantee, community interest companies and charitable industrial and provident societies to convert into CIOs will not be brought into force until later

Key characteristics of a CIO

The key characteristics of a CIO are:

• Single regulation and registration. CIOs are regulated by charity law and not by company law. They only need to register with the Commission, and not with Companies House.
• Registered charity status. All CIOs are registered charities and an exempt charity cannot be a CIO (regulation 5, General Regulations). At the same time as an organisation is accepted by the Commission for registration as a CIO, its details are entered in the register of charities.
• Separate legal personality and limited liability. Like any corporate vehicle, CIOs have a separate legal personality and can contract and hold property in their own name. The liability of its charity trustees and members is limited.
• Membership. CIOs must have one or more members. A CIO’s members are either liable to contribute up to a specified amount to the assets of the CIO if it is wound up or not liable to make any contribution at all (section 205(2)-(3), ChA 2011). A charity trustee can (but is not required to) be a member and the members and the charity trustees can be the same people (section 206(6), ChA 2011).
• Less onerous reporting and accounting requirements. CIOs do not need to prepare a directors’ report under the Companies Act 2006, just an annual report under ChA 2011 (sections 162-166). The accounting regime in ChA 2011 applies to CIOs. This regime is less onerous than the accounting regime applicable to companies under the Companies Act 2006.
• One annual return. CIOs must prepare an annual return under ChA 2011 (section 169) but they do not have to prepare an annual return under the Companies Act 2006. They only need to send reports and accounts to the Commission and not to Companies House.
• Simple and cheap to set up. The CIO’s governing document must be in a form specified by regulations to be made by the Commission or as near to that form as the circumstances permit (section 206(5), ChA 2011). The Commission has produced two forms of model constitution. Seeking to register a CIO with a tailor-made constitution is therefore likely to delay registration (see Model constitutions). Unlike Companies House, the Commission does not (and currently has no plans to) charge for registration or the filing of information.
• Situated in England or Wales. The principal office of a CIO must be in either England or Wales (section 206(1)(c), ChA 2011).
• Limited transparency.The register of charities will contain details of CIOs including the date they are registered, details of their governing document and financial information. The registers of trustees and members will also be open to public inspection.However, the Commission does not currently plan to provide a publicly accessible register of details of charges over the property of a CIO and particulars of debentures issued by a CIO. This may well impact on the popularity of the CIO in practice (see Who will the CIO appeal to?).

There has been press coverage of a Supreme Court case dealing with a Pre-Nuptial agreement.  The amount of money involved and the effect on that wealth if the agreement was upheld meant that the case had interest to the public at large and not just to lawyers.

The case, Radmacher –v- Granatino, helped to establish pre-nuptial agreements and post-nuptial property agreements could be validly considered by the Courts when dealing with the finances of a divorcing couple.  It is important to remember that the Court, however, will always have the last word and will view all matters, including such agreement, within the provisions of the Matrimonial Causes Act 1973.  Under the Act the Courts will always be seeking a fair outcome.

But what about unmarried couples?  There is, apparently, a growing number of unmarried couples in this Country and they do not have access to the Matrimonial Causes Act.  If they have not made any specific arrangements then matters between them would be decided on the basis of property law and trust law and this might well produce a very different result from that which would be arrived at in the case of a married couple.

This is where the Radmacher case provides a useful hint.  An unmarried couple can enter a perfectly valid Cohabitation Agreement or Trust Deed to deal with matters such as the home and other property.  This should always be considered where the unmarried couple are in the process of buying a house.  It might seem like an additional unwelcome expense, but the couple should seek advice from a solicitor who can provide an appropriate Cohabitation Agreement or Trust Deed.  The cost of preparing these documents will be far less expensive than the significant costs involved if there is a dispute and a Court application is required.

A well worded document should mean that the parties do not have to go to Court if the relationship breaks down.  If they do end up in Court it should still produce the result which they intended rather than a potentially very different result imposed on the couple by property or trust law.

On 5 December 2012, the Chancellor of the Exchequer, George Osborne, delivered the 2012 Autumn Statement.

The key announcements of particular interest to the property industry are:

• Confirmation that there will be no new “mansion” tax.
• All newly-built commercial property completed between 1 October 2013 and 30 September 2016 will be exempt from empty property rates for the first 18 months following completion of construction.
• CRC Energy Efficiency Scheme: CRC will be simplified from 2013, rather than scrapped, but the effectiveness of the CRC will be reviewed in 2016.
• The government will continue to provide a grant to those local authorities that decide to reduce or freeze their council tax in 2013-14.
• The government will continue Support for Mortgage Interest until March 2015.
• The government is consulting on proposals to introduce an income threshold for social housing above which tenants will pay full market rents.
• Various proposed reforms to the planning, and related development consents, regimes to reduce the costs and time involved in developing infrastructure.
• Infrastructure projects designed to improve the UK’s transport and broadband networks and provision for housing.

There were no further announcements on Stamp Duty Land Tax or VAT.

 On 28 September 2012, the Financial Services Authority (FSA) made amendments to the Prospectus Rules (PR) to reflect Commission Delegated Regulation (EU) No 862/2012 of 4 June 2012 amending Regulation (EC) No 809/2004 as regards information on the consent to use of the prospectus, information on underlying indexes and the requirement for a report prepared by independent accountants or auditors (Regulation 862/2012).

Regulation 862/2012 came into force on 22 September 2012 and made certain amendments to the Prospectus Regulation. The FSA has simply updated those parts of the PR that reproduce the Prospectus Regulation, to mirror the amendments made by Regulation 862/2012. These include:

• The introduction of a new Article 20a (reproduced in PR 2.3.1) and Annex XXX (reproduced in PR Appendix 3), which relate to the consent to use a prospectus in a retail cascade, and the disclosure requirements relating to such consent.
• Amendments to the Annexes to the Prospectus Regulation (reproduced in PR Appendix 3), which relate to proprietary indexes composed by the issuer, and the requirement for an auditor’s report accompanying profit forecasts or estimates.

Source: Prospectus Regulation (Amendment No 2) Instrument 2012 (FSA 2012/57) and FSA Handbook Notice 123.