welcome to this presentation on Gives the property on transfers pat on the value it is brought to you on behalf of data low by myself. Steven Desmond This is an important subject because it's what we had to say until several years ago gets. The property did not trigger composer registration of the documents. A lot of veggie Street also gets the property decades ago, where it was just a simple transfer for your consideration. Might have just been prepared by the campaigns as a conveyance. Just simply stating that Joe Blog's transfers or conveys in fee, simple or whatever terminology was used them. The property into the joint names of himself armed less to ST Joseph E. On the consideration might have been stated as in natural love and affection. It might also been in those days that campaigns there's and painted solicitors didn't go much further than just simply giving effect to the client's instructions. You could almost call it as a financial advisor might call it an execution only service that your only job is just to effect the deed on behalf of the client. But over recent years, the best associate it with these types of transactions gives the property transfers on the value has become more apparent. Let me take a real life case that was highlighted to be no slow again, where a married couple who are in the seventies apparently burned on the severe debt, some of it is registered against their home. They told their conveyancing solicitor that their home, they believe, has an open market value of 3/4 of a £1,000,000 that I believe at the time of speaking with this Banzer had not yet been verified by the client. No, as with any of these examples, I don't give details of the name of the firm or the location of the property, but justifies to say I was that told that's The parents wanted to continue living in the house, but they couldn't pay off their debts and the creditors on a mortgage e at Wells, in essence looking to threaten repossession so they could lose their home on with the amount of the debts, they wouldn't be able to buy replacement property of similar size in that area. So their proposals that they wanted to sell their property to that song, but he could only raise £250,000 by way of mortgage. So they're proposing in it that to give him the sellers gift a deposit peppery, very old phrase at some of us remember give the deposits 5% being acceptable to lend it. So when lenders were throwing money around like confetti and lending, or 225% of the value of a property. It's not unknown for the mortgage lender to allow a gift a deposit. It represented 5% of the sale price, so somebody sold for £100,000. But really, the price was £95,000. It was just £5000 taken off the sale price at the purpose of doing so was just purely to say to the morgue is leading the biohazard deposit fast forward to today. Lenders don't have similar policies, so any service get to deposit that mate with after reporting to the client. Now, in this case, we're talking about very significance, a gift off equity. So if you look a husband wife in this case, each one of them, if you mean that they have unequal interest as tenants in common in the equity off giving away. They're harsher in the property or willing to do so for any facts a significant owned about you. And you could argue that they're both reducing the bung you off their own personal estate by £250,000 by making the disposition to that some so there. Some then buys this property. I'm assuming the lender agrees with the arrangement because the next think of a soldier. Parents wanted to continue living at the property on with that situation. You're then looking at possible inheritance tax implications. Give three observations, which are beyond the scope of this presentation. But combats should be mindful off. Possibly have. It's a tax implications where there's a gift with reservation, we need any trucks for undervalue. Andi. We don't know if the mortgage lenders the same will allow the parents to continue living. There will be prepared to lend when the property is being bought at such a significant about. But the risks to the parents are huge. It might be probably advised. They would say it's a great deal for us because we continue living property. All that that's a cleared. We don't have to move. But on the other. There are also other. It's do them because it might be they're better calls would be to look to selling their market. But then, of course, the clients like that and say, Well, if I had some in the open market, I'm in the situation that I can't buy a property of the civil size. So the arrangement being proposed is that relevant? No, but just illustrates some of the issues in that particular case on clients who have mental capacity outing in their free will do have the right to make the decisions to enter into transactions which saw might see are subjectively not to let this interest. So he calls into question What is the extent of the complaints of Roland transaction? And it's that situation that I will endeavour to look out in this presentation. So the first port of call is to consider issues relating to transfers of equity and transfers is undervalue particularly bearing in mind the provision off the Insolvency Act 1986 particularly Section 33 nights off that piece of legislation. So what this legislation says is if an individual A makes a deed of gift of property or effects a transfer property first consideration significantly below the property's value. If that individual a years later bait bankrupts, then there is a risk that Ace Justin Bankruptcy condemned applying to the courts for an order setting aside the transact room section 339 No, the Miss consensus side technically only advises if the transaction was entered into irrelevant time on relevant time is generally the period of five years, ending with the date of the presentation of the bankruptcy petition upon which a is a judge to be bankrupt. The detailed provisions off Section 34 t 34134 to beyond the scope of this presentation just finds to saying that you could be dealing with Trump spirits on the value on a the individual at the time of the transaction. They will be sold, but the risk of insolvency happening within a five year period and then the trustee in bankruptcy of the bankrupt, then obtaining off that societies well, which conveyance to sometimes have to take into account. If you look at my notes on Page two, particularly at section 1.2 section 1.2 point one there was a note that that if a has transferred property, but a significant undervalued to bay and then be that disposes within that fight, your payment to see the property, assuming that see axing good faith, see have no notice of the fact that the earlier transaction has been entered into its value that may or may not be the case. For example, in Finland Registry have recorded the nominal consideration or on the disposition between A and B to have been done. But about declared draft in the premium paid. Then see would know that the value transaction, however, it would also be a requirement or C to be acting off the new ball fake for C to be aware. That's at the time of acquisition of sees interest that A had also been adjudged bankrupt, all being made the subject off a bankruptcy petition. And so ordinarily, where there's no bankruptcy entry on the register to alert the purchaser of that fact, see, would be about it by perched above you and that all of us outside could not generally be obtained against C. One exception is it. C is associate of either baby example. It see is a solo daughter off a B very briefly. There's also the important case of Hillary Haims. This was a transfer pursuant to transfer property order in divorce proceedings. The issue raised in that case, WAAS whether or not that been undervalued transaction um in such transfers is often the case that there may be no money changing hands or only a small amount of money relative to the value of the property. So it might be that somebody wants pounds. For example, wife might say, in terms with Pocket to May, I will wait my rights to the periodical payments all themselves. So the Court of Appeal in Hill versus Hayden's said as a rule, then transfer for she wouldn't to transfer property order in connection with divorce proceedings and, by extension, to dissolution of this partnership cannot be overturned on the 2nd 339 provided there was no fraud mistake, almost representation. I just also mention, but it's mentioned in the notes that a transfer of equity can be deemed to be a prolonged about you if it doesn't include or involved the transfer of the legal estate of property, what may be the creation of decoration trust or an assignment of a beneficial interest. It is also worth noting that it is possible to assign a beneficial interest other than by way of trust, declaration or so assignment. All the benefits of interest has to be writing and signed by the person making the assignment. For further details off the relevant section provision, I refer you to section 53 of the Law of Property Act 1925 for present purposes. I know wish to refer to the decision off single about his brown initially will happen in this particular case. I don't married couple Mr Brown and Mrs Molden, wrapped purchased property, enjoyed names on the right to buy. It was originally Mrs Golden Brown, who waas the secure tenant with the right to buy. They made a contemporaries declaration of beneficial joint tenancy. It was an alleged by Mrs Molded around. The games. Had not advised on the distinction of joint tendencies on tenancy in common, particularly wanted Andi. As a result, She then served notice or severance on Mr Brown, which he then Julie acknowledge in writing. So he acknowledged it on the seat of the dentist on the also noticed, and he also acknowledged the content which stated that the results of the severance would be that combatants for her bed officials and title would be 99% is 1% when he was made bankrupt. His trustee in bankruptcy sort have the dispositions that aside on the court in this case, it annoyed with seven on the court in this case of knowledge that the notice of separates and received their own constitute the transaction that trustee in bankruptcy salt sets aside, The court also held that the original declaration was followed The notice of severance waas, in essence, a transaction for their consideration for the purposes of section 339 Because it constitutes the voluntary Trump's for the fourth time, percent beneficial interest for Mr Brown to Mrs Mould number. For reasons best known to the court, the court beside you. This was an exceptional case where the notes of seven should know be suffer something. But I would just mention birds in order. Under Section 339 Consultants out about physics made with respect troubles actually entered into or given by an individual who subsequently adjudicated bankrupt may contain further provision permitted by Section 32 Such a vision might include requiring any property problems. Firdous Transaction to be vested in the trustee of the bankruptcy estate. It's part of the state or require any property to be so bested. Represents in any person's hands the application either of the proceeds of sale of property. So transferred all of money, some transferred. Furthermore, it's been held in the Court of Appeal decision of stolen versus from Branson. The effects of an order on the Section 3 40 is to require the property transfer to be vested in trustees part of the state, and that besting takes effect as from the date of the bankruptcy order. No earlier stolen decision also confirmed that claim on the Section 339 to set aside the transaction, so get 12 year limitation period by virtue of Section eight off the Limitation Act 1980. This is because it is a claim on an act of parliament that for a claim on specialty, there is some uncertainty as to whether or not this 12 year limitation period rooms from the date of the bankruptcy order or they necessarily later date. But a trustee in bankruptcy experts appointed or when they receive, becomes a state So it is possible the application under Section 33 set aside, might be anywhere up to 17 years after the initial clubs actually under on there would inevitably be a further period of maybe a few weeks or a few months before the court actually makes the order set aside. Conveyances generally, who were acting on a disposition where there is either comes of equity or to them about you. All one, which has come to their attention in the preceding five years prior to propose disposition will generally tend to rely on indemnity insurance policies for this, but it's always worth while being aware of what development born in any given situation. Next up is what referred to cases where the peasants bankruptcy was preceded by a trust declaration so little about the decision of tongue reverses sounds. What happened in this particular case? Waas. Mr Singh was the vegetable flight. 17 properties there have been acquired over a beautiful 20 years. He had been made bank roads, so his father claim to be the sole beneficial owner of all of these properties under a bad trust. In other words, you claim in the sun was the proprietor but he waas the beneficiary under trust. Some was merely a battle state. The evidence shows that the father have wholly or substantially probably purchase properties, but the properties had all been acquired in or subsequently transferred into son's name. The court had to determine whether the properties for part of the bankruptcy estate was interesting in this decision is the parties have made a declaration of trust prior to the bankruptcy, but for some reason they just like to back date but declaration. So it was dated three years price of the actual dates on which it was executed. The court, taking that back another facts into a town, decided that there was no trust. Weeks have been established over any of these properties by common intention of Barbara. It's on a time the available evidence clearly. But all of these properties treated from the time they were required Bye, Mr Singh, the sun has belonging to him. Beneficially, this case illustrates is that transfers of funds about you are a risk off being set aside. If the transfer would subsequently made bankrupt Now, contrast this decision with the case of Williams Trustee in bankruptcy Jonathan James Taylor vs Taylor in this case, Mr Taylor, transfers of residential property into the joint names of himself in his wife. The TR won't declare them to be tenancy comedy shares. Surely there, after they made a declaration of trust you shortly prior to the transfer, a company of which Mr Taylor was a shareholder creditor, UN for which was a guarantor, entered into a creditors voluntary liquidation. Six years later, Mr Taylor became bankrupt of his own volition. About the wondering, What about the fine? Give hatred? Well, this is where Section 4 to 3 of the insolvency act comes into play. There is no five year period following the transfer, which applies to a Section 4 to 3 application. But the trustee, but only set aside the Trump Sprinter joint names if he could be showed it was made from purpose of putting assets beyond the reach off a person who's making or sometime make a claim against Trump's floor. Or it was made to otherwise prejudice the interests of such a person in relation to claim, which is making or may play. So the court of appeal satisfy the on the base off Trump's for it was executed for no consideration. It was followed by an event Expose Mr Taylor to a restaurant credits his name. Movie credits is voluntary liquidation of the company a waiver. What was crucial about the declaration of trust is that it recorded that Mrs Taylor contributed £120,000 of another body to the improvement of the house, and the body back contribution had risen 2 £305,000 in line with an increase in the property's value. Also at the time the improvements were made in 2001 the parties have agreed that she would acquire an interest in the property reported expenditure that's compared with about the property. They also agreed that the mortgages would be born as between the two by Mr Taylor's. Mrs. Taylor had also contributed 100 £20,000 in 2002 for the benefit of Mr Table by way of loan to a company. At the time alone was made parts intended alone to be secured against his interest in the property. The loan was still outstanding in 2003 with no prospect of being repaid in full, so the Court of Appeal satisfied in this case that there were no grounds for overturning judge's ruling that the trust deed was intended to give it back to the arrangements made between parties. That the process which led to the trust being declared, was initiated before the creditors voluntary liquidation and that it was not a response to that liquidation. Very occasionally, I, um by combines is what are they to do in circumstances where a client approaches them? In similar cases? Such is the Taylor case example, a situation where a couple have been married for 30 years. They live in the matrimonial home property, but you have been registered in his name. He is now facing bankruptcy, and he's also retired that this is why so in our situation. I then asked the combines, Has your client any evidence that on a gentleman's wife has made any contributions towards, such as the original purchase or made a financial contribution towards the mortgage repayments or in any way is paid for the improvement of property? But the convinces response to that question was a decline that indicated that some time ago mortgage has been paid off. He simply have no records of any payments of it made prior to that. The commander was also right, I think, in advising his clients that evening they entered introduced Declamation, which was proposed to declare existing Ben piece of trust between the qualities that because of the absence already I am still evidence of any contribution by they wife. That's eight baby difficult. See defend any claim for set aside such a disposition that's very veterans happens. But this presentation is also designed to look situations may occasion encounter, but also like to look at all the issues which right from deeds of gift in the reinstated, Joi Smith ceased kicks versus late. The issue was not a property disposition that say, but it was the instruction carried out by Celestine Transfer. Net sale proceeds Almost £290,000 No to the elderly ladies own bank account. Balto about account in the joint names of something more dorks of Mr Mrs Late So relevant background information. Of course, that was that Mrs Smith school. The daughter had died previously busy Smith also before the transfer made will which largely benefited the surviving daughter, her Children. A few months before the transfer, Mr Mrs Lee took Mrs Smith from her office with home made system and then arranged for her to be moving to a care home. This is dying now, Mrs Lee, the defendant, claims the Trump Tower of the proceeds had been a gift to her from her late mother. The high court decided that Mrs Smith had mental capacity to make the gift. But it noted that relationship between mother and daughter was one of trust and confidence. I'm warning, which the daughter was in. The ascendancy on the mother was vulnerable. Furthermore, the transaction also called for an explanation because the sale proceeds represented Mrs Smith principal assets gift of just on the tuna. That £3000 was out of the ordinary called for an explanation. Furthermore, there was no evidence that Mrs Smith received any independent, legal or financial advice about the nature and effect of the gift. There was no evidence at all. Mrs. Smith gave any consideration to the gift, the size of it and its effect upon the provision in her will or ability to bond her care in the future. These reasons courts held the gift of the proceeds was procured by undue influence, therefore ordered the total amount of the net suppose used to be be paid to. Mrs. Smith stayed together with interest from 2010. Next decision is the case of Paul versus Pole on, in this case into happening tell House was transferred without consideration from Father level to some Bradley. Thereafter, Neville continue to live in the property. However, for some reason, Level told the solicitor that he would be moving in with his son. The court set aside the trucks there on grounds of undue influence. On and off. The court generally said that the splices advice had been appropriate. Onda had gone into quite a lot of details about the problems with my arise in respect of such a transfer before I come to the courts. Conclusions on the legal advice, however, just read bench about the circumstances of the transfer. In 2010 Level was 67 so still fairly young was not working, not embassy of pension, over the benefits. He had lived in the property since he was purchased in 1983. The property was mortgaged. Andi. A retrospective evaluation indicated that the value of the property represented for the 1/2 of levels assets the 2010 transfer radically alter that position without the property without any established right to limit the property. Nevil had been left with no secure home in less than half his prior assets. Now this list it who was instructed in the transaction, had prior to the signing of the transfer, but slowly and verbatim the entirety off his note, which indicated the risks to level court described it is very much a lawyer's documents. What he did not do, though, was made plain that transfer was irrevocable or you might prefer the word irreversible. So another point which is mentioned was that this list that had spoken so you never in the absence off his son. But his son was in an adjoining room but the solicitor's office. So it would appear that Neville would have been conscious off that fact and of Bradley's expectation that trucks but would be concluded at the termination of the interview. What this case really demonstrates how difficult is full conveyances when called upon to act clients who insist on making such transfers against advice, Los Andes also issued a practice note entitled Meeting the Needs of Vulnerable Clients. Andi just a few brief points, which tormented in the practice? No, first of all, when assessing a client's mental capacity, it is for these listed to decide whether or not the client has capacity to instruct you. Whether you can accept on act on the client's instructions, Miss Lister should conduct an assessment wherever possible with the client alone at most applied, the relevant legal test in respect of each transaction at the time of the decision needs to be made. So the case that we've just considered kicks inlay on and the Poland Paul case were cases which concerned wound you influence in the context of significant lifetime gifts. In one case of money in the next case of property alongside a practice that also covers remember words, the issue of mental capacity is beyond the scope of this particular presentation. But is one clearly that combines at least remind love in advising clients and civil of circumstances the next to get his gifts to avoid Camby's. The background to this subject is Camera 2014 for England on the Social services on well being Wales at 2014 Oh, that's allow local authorities to charge a person or cost that the authority occurs in meeting Karen support needs on the Relevant Provisions Development Act under the CARE Act, Relevant regulations provided the financial resources off a permanent residence. In terms of capital we succeed £23,250 well being. The local authority is not permitted to pay towards the cost of the provisions off accommodation. Can him for that adult. So that will mean the Advil having to arrange their care, which will often be more expensive in privately funded nursing homes. Four cabs. He's also the National Capital Room that when carrying out the means assessment that apple, this treatise possessing capital, of which the apple have deprived themselves for the purpose of decreasing the amount that they might be liable to pay towards the cost of meeting their needs for care and support all their own needs for support where the uncle is treated as possessing capital, then the regulations applying the purposes of calculating the amount as if it were actual capital that the adult does possessed. They're also circumstance from the regulations where capsule would have to be disregarded in the calculations of the couple's capital, so just very briefly. This would include the volume any premises acquired. Occupation by the claimant, which he intends to occupy as it's only or main home within 26 weeks of the date of acquisition, also longer appeared, as is reasonable in the circumstances to enable the claimant to obtain possession and commence occupation off the premises. My notes on Page 10 which company this presentation give a few other examples. So where a disregard of plants on the value of the relevant capital or equity in the property is disregarded, then that would clearly be a factor which would need to be taken into account because it would mean that that asset would not be deemed to form part off the residence or the adults capital. However, a more important provisions now exists in section 70 of the Care Act 2014 Andi Section 72 in the Equivalent Act in Wales. This provides that where an adult needs have been or are being met by a local authority. Under the relevant provisions off these acts aware and Advil was transferred, that set total, the person being does the trucks very Trump's Berg was undertaken with the intention of avoiding charges for having the adults needs met. A knight of the consideration for the Trump spoke was less than the bone of the asset. Well, there was no consideration for the value of the asset. Then the trumps free will now become liable to pay to the local authority an amount equal to the difference between the amount of the authority would have charged the adult. We're not for the transfer of the asset on the amount it did impact Charles. The asset Trump Street is not liable to pay to the authority and amount which exceeds the benefit accruing to the trumps free from the transfer Andi if there was more than one trance free. But liability of each Trump's free is in proportion to the benefit accruing to that, Trump's very from the transfer. So very briefly. What this new provisions beans is that unlike the rules which supplied before these rules were adapted, the local authority could now pursue the trumps free, so that creates an extra disincentive for people to enter into transactions whose express intention or one of the main purposes of which is to put the asset in effect beyond the reach off the local authority the next, so get, which is taken to account. In this presentation, taxation considerations might apply on a transfer or equity. The purpose of this section or section of the presentation is not to examine intact in great detail, but it's just to examine how tax might be applicable to a transaction. And the conveyance to insult circumstances will be very, very careful at the extent of their retained. For example, making clear to apply It may be a tax liability, but it explains the client that is beyond the scope of the conveyances expertise. To be able to advise on a calculation of the amount will be any lawful steps which could be taken to mitigate the amount of tax payable for every point about inheritance tax give with reservations. So just simply stated, lifetime transfers are subject to inheritance tax on the donor's death if the estate exceeds. Born in £325,000 the transfer is potentially exempt. Y t pet, if you just made by one individual to another on the idea behind this is that the gift reduces the volume off the individuals estate. So if you give away an asset the new consideration with £200,000. That's the trucks for volume £2000. We produced the value of the estate. If individual dies more than seven years after they to the pet, then the value transferred would not fall part. There's date for inheritance tax purposes. However, in campaigns in terms, it might be that the parties genuinely intended to trucks for the property outright. The weather inheritance tax purposes. If the individual who made the trucks for has retained a benefit in the property sometimes referred to as a gift reservation, then the transaction would not have been a potentially exempt transfer. So there's a reservation person, so a reservation is retained. Possession and enjoyment of the property is no boat. Find a assumed by the doe me at the commencement of the relevant people or at any time during the relevant period. The property is not enjoying to the entire exclusion over to the entire mint solution of the donor or on of any benefit to him or otherwise. Hmrc God. Virtually to the entire exclusive, the Donald has bean very narrow in scope, permitting occupation or use or very limited nature organizations such as short stays and temporary stays for some short social purpose. Your point is, if the person retains the benefit or the reservation until they die, that in the gift would not be a pets on the value of the gift would fall. Part of the donors chargeable state, a gift of undeniably chair is also capable off being caught by the gift with reservation rules. So this might apply where there's a transfer from one individual into joint names. It's also possible that the gifts with reservation rules can be circumvented lawfully if the person retains a benefit pace. Full market rent for the duration example in the case off don't know or transfer continues to live in the property, paying a full market rent, which is periodically reviewed to open market levels. So complains that mindful off a potential tax liability reply, May will say to the client that you would benefit for inheritance tax advice. Andi, I cannot provide this because this would require a private client, lawyer or tax accountant to provide that advice. We'll also mentioned very briefly that pre owned us a chance to income tax on Mom. Andi. It's my understanding that not all private client lawyers advise on this particular tax. It is an income tax charge, which applies in certain cases where an individual occupied any either the disposal conditional. The contribution condition is met. As respects the lab, just Reese examples will suffice. The 1st 1 is they previously owned, the land or the property, so that can very easily be established by example. Obtaining a historic coffee of the register on 4 may see so another circumstance will be. When they sold the property, they gave the net sale proceeds to somebody else to buy property, which they now live in. Thirdly, they provided consideration for purchase on. They now live in the property. But somebody else bought the house that any of those three cases the occupy it could be liable to the tax there. In the 1st 2 cases, you may well be called upon to deal with those. So in what circumstances is a conveyance of likely to need to advise a client? So in the first instance, if the clients making a disposal by way of gift an intense to continue living at the property, then income tax charge might apply, I would suspect that the commander in the light off Hickson Lee would not bad being both with the direct Trump's for phones from the Sullivan property to 1/3 party. There is also a right to let to be charged on the inheritance tax get with reservation provisions. Andi, This election needs to be done on a prescribed for my 8500 and it needs to be submitted to the Capital Taxes Office pre owned asset unit by 31st January in the year following the first year of assessment. If the election is not made by that day, the individual would potentially be liable to income tax challenge until he ceases to benefit from the pre owned asset or if it falls back into his estate for inheritance tax purposes. For example, because the Dhoni gives it back to him again, it's possible to avoid the charge if the donor pays full market rent under a tenancy agreements so that the payment is made pursuant to a legal obligation. The income tax charge is also based on the rental value of the property. So if the annual rental value exceeds £5000 the individual could be liable to make the annual payment. It's also possible that's a person who is probably vines may decide not to make the election, but if they do make the election than they potentially avoid the liability to pay the income tax charge but would be charged under the gift with reservation rules. Thirdly, capital gains tax can also apply when there is a disposal acquisition of Asset, which is deemed to be a consideration equal to the market buggy the asset. And that would be where a person acquires or as the case may be disposed of, the asset other than by way of a bargain made arms like particularly where the person disposes or requires it by way of gift. So I refer you to the Taxation of Chargeable Gains Act 1982 on in particular sections 17 and 18. So where a person disposed of acid to a person connected with him, then the person acquiring the asset on the person making the disposal are treated as parties to the transaction other than by way off bargain made arm's length, a person is connected with individual. If that person is the individual spouse of civil partner or is a relative or the smiles of civil partner relative off the individual or the individuals, spouse or civil partner relative includes brother or sister. Just write briefly as well. We're talking about cases where the disposal is of a property, which is no or has never been the only or being residents off the this Bonal because it dances the case. The transfer all would be entitled to claim principal private residence, really from capital gains tax. There is also a form of exemption for spouses and civil partners living together in any tax year. So if one spouse visible part that transfers and that's it to another, both will be treated as if the asset was acquired from the one making the disposal for consideration of such amount as we secure neither a gain or a loss. And if the Dhoni makes a subsequent disposal, chargeable gain would be based on the cost of acquisition paid or deemed to have been paid by the don't know so so to transfer would not be beating the chargeable to see you t. But when the only makes a subsequent disposition, their liability to tax is likely to be greater because the chargeable game will be calculated over a long period. Also, it's worth bearing in mind. That's if the donor, or does not pay the tax that needs to be paid on the disposition within 12 months from the date when the capital gains tax became do. HMRC may recover that sum from the Dhoni within two years from the date when the tax became payable. Our next a jet is the risk off fraud, which arises where there's a Trump's fertile undervalue. So the first case of suspension was actually a criminal case. So in this particular decision, this was the chrome versus choke on on others. So in one case, Arka, who was employee of a company arranged for the sale of property owned by the company on the basis of was in disrepair, it was sold at an artificially low price and subsequently sold on the open market Value was generating a fraudulent profit. The sale so Mr Choe and was supported by a false mark being male. But the second sale, slightly over a month later, was for significantly and hunts price, so that really illustrates the case when there are sales in a very short period of time following a knee earlier purchase. Maybe that's one of the reasons why the lenders humble requires a matter to report into them. If the registered proprietor who's making a disposition or seek in every walk it has not been registered for six months. Another case involving it a person or Croft. He bought the property under value. There have been a very quick and quiet sale. It was brought to the name of his partner. It was purchased £160,000 after some renovation work. 14 months later, it was sold for £376,000. Also, there had been false invoices given under the guise of a different piece of work for different property. Johanns role Waas involved in buying or selling all the properties funded by a chuckle days that the director of a company working closely with co defendants. Cohan's role in buying only happen Neza Front could only have been to deceive people into thinking that things are always company. We're not buying as many properties does. In fact, we were in relation to properties, show inmates successful office in his own name, but then gave way to Naser after the purchase was agreed in relates to three other properties he made supporting offers. Whether successful bid was made by Naser. Each of the sales were supported by fake bids or valuation from the state. Agents that were fought have a conveyance see acted on these, I presume, was unaware of the fraud in day to day transactions. But it does reinforce the point made in the law status, money laundering guidance that commences need to be very careful if there's a sudden, unexplained or theological changing the client's instructions. Example. The client tells you that Joe Blog's is buying the property, but then shortly after that reveals that it's actually 1/3 party. Who is going to be buying it. Unfolding the purchase. Prince singing is another case, but this was a case involving broad as well. But the fraudster was never caught so interesting. Facts about this case, the pain sir who acted on the sale would be made aware of being client did not live in the property. The property was vacant. It was a mortgage. The speed exchange of completion was required on the purchase price was around £470,000. Not mentioned in the court judgment But that's well below what I understand to be the typical volume houses in Wimbledon. So I have heard somebody who practices in that area who say to me that £1.2 billion is a typical asking price for a house in Wimbledon. So all those France's together reveal the high level of risk. Possibly though the most glaring oversight by the solicitor was the production of utility bills and banning statement for an address in Maidenhead. Why was out problem? First of all, the property was based in Wimbledon, and also the address for service on the Register of title was in Cambridge. No attempt had been made to contact Mr Doors and the red proprietor of Cambridge Address, and it's such contacts have been made. Then this broad would almost certainly have been thwarted before it reached exchange or completion. Also this list is it bounce. What's ready? You tilt your council tax documentation either for property, Wimbledon or for the addressing Cambridge. Now the bias convey answer sent the sellers listers additional enquiries, asking all you familiar with Sela, and can you verify that they are the Suthers and check their I D to support the same. So sister revealed that prior to being approach to acting sale, they have no personal knowledge of Mr Dawson With that, they also said, We confirm that we have met him in person. You've seen his passport now this was a killer line. We've also seen his utility bills etcetera, showing his UK address was notified to us. The bias listers were held to be equally culpable for the losses caused by the broad step because they had failed to clarify which UK address the subtlest lister was referring to. If they said Can you clarify which UK address? You notified the seller's list. They will come back to them and said in Maidenhead. But then the bias conveyances with then we don't have to raise a full of inquiry asking Sellers list. But have you seen any proof off address that either the property in Wimbledon or in Cambridge now, in this case, the Sellers listers have adopted that 1998 Law Society code for completion? Which was surprising because this was a transfer which took place in 2012 and also there was an addition off the Law Society code for completion, which should have been used in. That's a 2011 addition. It is also very briefly mentioned on that school. Just make sure that you are using the current version off the law society's TA 13 form replies to requisitions. It's important that used 2019 version of this because that refers to the most recent law society addition off the coat for completion by post beyond escape this presentation. But that 2009 edition has been updated to clarify that the seller's list, in effect, is warranty on undertaking to the bias lister that the for most list it is actually acting for the real or true owner off the property being sold. And that's important because in the law cited view certainly expressed in the 2019 version off the Law Society National Conveyancing Protocol. In most cases, where the seller's solicitors have indicated that they will abide by the 2019 for complete by post, then the bias conveyances shouldn't be ordinarily raising enquiries. As to the due diligence. AML checks for the taking by the seller's conveyances. Unless they're a fraud. Indicators do not respect. I refer. You see the original text of relevant information which is set out in the protocol. Our final topic is the right to buy with financial assistance, particularly from a family member. The right to buy probably has had diminished significance in recent times because much council housing has already been sold off to, for example, housing associations. Also, many people have bought their house and right to buy on the right to buy. It's been abolished in Wales at the time of this recording. We don't know the government's full proposals for housing association right to buy, but it might be some of the issues that we raised today. My also be relevant to such purposes. We'll drop just to focus on the right to buy on its web bearing in mind that there is a cap on the right to buy discount available to tenants in England, the amount of the car is periodically increased, usually on an annual basis, so for the year from six Table 2019 to April 2020 the cap full London is £110,500. Andi, outside London in England, £82,800. If we also look at case ball it is so if evidence from relevant decisions that in terms of assessing the 500 contribution that parties made towards backed by purchase, the discount has to be treated as a financial contribution by the tenant. They won't a pair. The discount will appear in the trumps for or the companions. But if a declaration trust is being made, that discount, in essence, is a contribution in money's worth to the purchase. So I've just mentioned one case where the some takes out a mortgage, too. In effect, help his parents buy property. The parents. So contribution was the discounts that they had a quiet. The intention was, is that the Sun was to acquire 100% beneficial interest under a declaration. Trust on the parent of the right to remain living rent free in the property for the rest of their life. So Paloschi this trust declaration contained a forfeit because in terms of the sun would forfeit the whole of his beneficial interest. If you fail to pay all sums away onto the mortgage, we kept those payments up to date over in 18 year period. He also fully enjoyed the property all relevant times. The court held that particular trust declaration had not been procured by undue influence. Now, if you look and a similar case Humphries and Humphries, what we see in this particular case there was no forfeit supervision in the D, so there was no penalty. If the sudden failed to pay all sums, owing them to the mortgage, the sun did allow the markets payments to fall into arrears. The parent in question was now risk of losing her right to occupation of the house. That's Lister had not made attempts note indicating that mother and son have been buys about the effects of the trustee. Thesis is advice to the parent that ignited comprehensive by all aspects off the proposed transaction. No independent. So it failed to warn the client of the risks of what might happen if the sudden defaulted on the mortgage repayments on the property was sold. No disclosure that much is relating to repair of incidents of the house. A Dol sae, the other point Waas is the parent. Had six of the Children on this list, it could have discussed with her asking one or more of the six of the Children to join the transaction, so she would in effect have the benefit of more than one person who would be liable to pay the mortgage. Also, the property could be sold without the consent off her son. So court decided that that trust acclamation had been procured by undue influence. It might also be in certain cases that there is no new temperatures declamation because but the Section 123 of the housing up 1985 a secure tenant may in his section want to to notice, which is the application to exercise of Active. I require that not more than three family members who had no joint tenants but who occupy the dwelling houses their own your principal home should share the right to buy him. Tell it may do so validly in respect to such member. If that member is his files, it's civil partner always been resigning with him throughout the period of 12 months, ending with the giving of the notice. In any case, it beloved old consent. So where do I start to notice? Any members of the tenant's family are voluntary, required to share the right to buy the tenant that right to by belongs to the tenant of those members jointly. But as the Court of Appeal decided in Alaska, the provisions of Section 123 have no effect in respect of the consequences off any beneficial interests. Just one also interesting decision is Richard versus Water would. So this case in 1989 Mr Mrs would be secure. Tenants exercise their right to buy that house. They didn't have the funds to complete the purchase, so their son in law provided the £9400. The parties then entered into a trust declaration on the shares between the tenants that Mr Riches, we're agreed they discounts, which was attributed to the purchases. The tenants was £14,100. The truce declaration said the balance of the purchase money had been provided in the amount of £5000 famished Richards on £4400 by the tenants. So even though the evidence pointed Teoh, Mr Richard provided the whole of the £9400 the Court of Appeal said as far the cash contributions were concerned, the declaration of trust walls conclusive. Andi. All parties were bound by the agreed statement US to their respective contributions, whether or not that represented the truth. So this brings to conclusion the presentation on gifts of property. Andi Transactions of undervalue We tried Teoh cover a range of issues and a range of but is risks. The campaigns under the client alike hopefully lots of ways that we can minimize those risks after identifying transactions or clients who may well be a risk. Need further advice. This presentation has been brought to you by myself. Steven Desmond datable I thank you for joining me. I'm people listening.
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