Protection From Creditor Enforcement Extended Until 30 September 2021

At the time of writing, Coronavirus statistics were looking fairly positive. Although hospital admissions have been rising day by day, the increase in Covid cases is being met by a wall of vaccinated people which has so far prevented the NHS from being overwhelmed.  However, there is news that the coming winter is likely to be a tough one, not because of Covid, but due to the uptick in flu numbers.  Acknowledging that as a country (and a planet) significant battles against the pandemic have been won but the war is far from over, the government has extended protection against statutory demands and winding up petitions being brought against businesses affected by Coronavirus until 30 September 2021.  The relaxation in conditions for a company to enter a Part A1 moratorium also continues until 30 September 2021 (although this was already extended in March).

As with the extension of rent-arrears related forfeiture and rent-arrears recovery under Commercial Rent Arrears Recovery (CRAR), the news is great for debtors, creditors are not left in such a rosy position. 

What is the law behind the Coronavirus-related creditor enforcement protection?

To help battling businesses survive the ramifications of the first lockdown, in June 2020, the government amended insolvency laws via the Corporate Insolvency and Governance Act 2020 (CIGA 2020).

CIGA 2020 was quickly pushed through Parliament and amended insolvency legislation to provide more favourable conditions to struggling companies throughout the Coronavirus pandemic.

The Act provided for:

  • Some companies, in certain circumstances, to gain a moratorium for 20 business days (this could be extended), giving them protection from creditors and allowing them to delay paying certain debts which fell due before and during the moratorium.
  • The creation of a Restructuring Plan, which if approved by the Court, would mean some creditors would have to accept revised terms relating to debts owed.
  • Prohibition on issuing a wind-up petition based on statutory demands.
  • Prohibition on presenting winding-up petitions or making winding-up orders if the evidence showed that if it were not for the pandemic, the circumstances surrounding the petition or order would not exist.
  • Prohibition on terminating a supply contract if the reason for doing so is due to one of the receiving parties undergoing an insolvency process.

This is only a small sample of what CIGA 2020 covers and it is beyond the scope of this article to go into further detail.  In October 2020, certain provisions of the Act were extended, some until 30 December and others to 30 March 2021.  The prohibition of winding-up orders and statutory demands was further extended until June 2021 and now to the end of September.

When can a winding-up petition be presented?

Until 30 September 2021 (and perhaps beyond), a creditor cannot present a winding-up petition based on a statutory demand served from1 March 2020 to 30 September 2021.  Furthermore, until September 2021, a winding-up petition can only be presented if the creditor can satisfy the following test:

  1. The Coronavirus pandemic has not had a significant bearing on the debtor’s organisation; or
  2. The grounds for the petition would have applied even if the company had not been negatively impacted by Coronavirus.

The Court is also forbidden to make a winding-up order unless the above test has been satisfied.

How an Insolvency or Commercial Solicitor can assist you if you are struggling to pay your creditors

The extension on banning commercial lease eviction and winding-up petitions will be extremely frustrating to landlords and suppliers, some of whom have been waiting over 12 months for payment.  At some point, the extensions will have to cease and there could well be an influx of business insolvencies, especially for the small number of organisations that, rather than putting in a strategy to pay their creditors, have allowed the can to roll merrily down the road, hoping for further extensions.

Although the government has indicated it is planning to enact legislation to potentially ‘ringfence’ rent arrears so tenants can focus on paying current rent owed, the vast creditor protection measures currently in place cannot carry on forever.

If you have been impacted by the pandemic and associated lockdowns, the sooner you seek professional advice from an Insolvency or Commercial Solicitor the greater chance you have of negotiating a fair re-payment plan and avoiding insolvency and possibly personal liability.

When it comes to outstanding debts, the earlier you confront matters, the more choices you will have regarding meeting your creditors’ need for payment.

To make an appointment to discuss any aspect of insolvency law please email us or phone 020 8349 0321.

Ban On Commercial Lease Evictions Extended Until March 2022

The Government has announced that the moratorium on commercial lease evictions has been extended until March 2022.  The decision has resulted in considerable controversy, with those in the arts, hospitality, and events sectors welcoming the news, and property companies furious that their legal rights are being further curtailed.

James Raynor, chief executive of the British and Irish arm of Grosvenor Property Group, told the media:

“I find it astonishing that one whole industry is being targeted by government intervention in this way and being deprived of their rights under the law. Owners and occupiers clearly need to work together in sensible partnership. I don’t see this helping, sadly.”

Melanie Leech, head of the British Property Federation, also condemned the move, telling City AM:

“The government has failed to recognise that commercial property owners are essential to the health of our town centres.”

“Another blanket extension to the moratoriums will provide further opportunity for those well-capitalised businesses who can afford to pay rent, but are refusing to do so, to continue their abuse of government and property owners’ support and will cast a long shadow over investment to build back better.”

It has been estimated that firms in retail and hospitality already owe £5bn in unpaid rent.

Full re-opening delayed

The announcement comes on top of the government’s decision to delay the final step in re-opening Britain following the Coronavirus pandemic lockdown measures that have been in place in some form since March 2020.  Prime Minister, Boris Johnson has delayed the dispensing of masks, social distancing, and limits on numbers allowed to attend sporting events, theatres, and cinemas will remain in place until 19 July 2021.  Nightclubs will also remain shut and the work from home edict will continue.  However, the rules on the number of guests allowed at weddings have been relaxed albeit with several restrictions such as facemasks to be worn indoors and table service only for food and drinks at hospitality venues.

The four-week delay to the end of lockdown measures will put even further pressure on the hospitality, cultural, and tourism sectors.  It is hoped that the extension on Commercial Lease Evictions will allow tenants time to re-establish their business and rebuild cashflow so they can pay off rent arrears and other debts whilst continuing to trade.

Landlord concerns on Commercial Leases 

Although the extension of the ban on commercial lease evictions provides relief to tenants for unpaid commercial rent, landlords argue that they have been expected to act as a bank to ensure the economy keeps functioning.  There is also the knock-on effect on pension funds which are heavily invested in the commercial property sector.

Landlords are also expected to make allowances for the ringfenced rent arrears when businesses were forced to close completely during lockdowns and ‘share the pain’ with tenants.  This has resulted in landlords writing off millions of pounds in debt.

The other concern landlords have is that large, profitable companies have been refusing to pay rent despite being allowed to trade through the pandemic.  Furthermore, many large companies are using CVAs to reduce their commercial property liabilities through closing stores, writing off arrears, and demanding rent be reduced in low-profit locations.  However, this month landlords won a rare victory concerning CVA’s when the High Court ruled in Carraway Guildford (Nominee A) Ltd and others v Regis UK Ltd and others (2021) that Regis Hairdressing Group’s CVA was for the benefit of its company shareholders, finance creditors, and trade suppliers at the expense of the company’s landlords.  Regis was proposing that rents would be reduced by between 25% and 75%, and arrears reduced to just 7% of their value.  Meanwhile, a long list of ‘critical creditors’ including shareholders and International Beauty LTD (which is also a shareholder) were left entirely unaffected by the CVA.  Mr Justice Zacaroli ordered the CVA to be revoked.

How a Commercial Property Solicitor can help commercial landlords and tenants

The continuing economic effects of the biggest pandemic in a century continues to be felt by everyone. What is essential for both landlords and tenants is that they are aware of their legal rights and have professional support to ensure their business interests are protected.

To make an appointment to discuss any aspect of commercial property law please email us or phone 020 8349 0321.

Graeme Fraser appointed to the Family Procedure Rule Committee (FPRC)

OGR Stock Denton LLP is delighted to announce that the Lord Chancellor has appointed Graeme Fraser, Partner and Head of the Family team, as a practitioner member to the Family Procedure Rule Committee (FPRC) from 1st March 2021.

Graeme Fraser commented: “I am delighted to have started a three-year term as a Solicitor member of the Family Procedure Rule Committee.  It is an exciting time to be involved, with considerable changes to family legislation afoot.  I look forward to fully contributing my practitioner experience to this role.” 

What is the Family Procedure Rule Committee?

The FPRC was established under Section 77 of the Courts Act 2003 to make family procedure rules. It aims to develop clear, easily understandable rules to create an accessible, fair, and efficient family justice system.  The Family Procedure Rules were implemented in 2011.  The Rules and supporting Practice Direction continue to be reviewed and updated to ensure they are in line with new legislation and policy initiatives.

Members do not receive remuneration for their work (except for reasonable out-of-pocket expenses).  The selection process is exceptionally rigorous, as Members need to demonstrate not only a solid working knowledge of Court and administrative processes within the family jurisdiction, but they must also be committed to valuing diversity and understand the impact of Family Procedure Rules and Practice Direction amendments.

About Graeme Fraser

Graeme Fraser is a Family Law Solicitor specialising in finance and children cases.  He has experience at High Court and County Court levels of the Family Court.  Graeme is a Resolution accredited specialist in complex financial remedies and cohabitation, the Trusts of Land and Appointment of Trustees Act 1996 and has the Law Society Family Accreditation.  He is also Chair of Resolution’s Cohabitation Committee.

About OGR Stock Denton LLP

Based in North London, OGR Stock Denton LLP is a full-service law firm that has been assisting businesses and people with legal matters for over half a century.

High Court Upholds 19th Century Test For Mental Capacity

Choosing to challenge a Will is not a decision to be taken lightly.  Any experienced, highly-regarded Civil Litigation Solicitor will tell you that testamentary freedom is a cherished part of English law and not one that the Courts are prepared to readily tamper with.  However, there are some cases where it is abundantly clear that something went wrong when the Will was made, and the Courts must intervene. 

The recent High Court decision in Re Clitheroe (Deceased) [2021] EWHC 1102 (Ch) is an example of where the Courts will uphold a challenge to a Will.  Furthermore, it confirmed that despite being decided in 1869, the test for testamentary capacity set out in Banks v Goodfellow remained good law.

The background to the decision

The Respondent, Sue Bond was almost entirely cut out of her mother’s Will.  The Testator called the Respondent a ‘shopaholic’ and believed her daughter would ‘fritter away’ any money left to her.  The Testator had also accused the Respondent of stealing various items from her home including her treasured set of Harry Potter books.  Therefore, she bequeathed most of her estate to the Appellant, Ms Bond’s brother.

The County Court Judge found that the Testator’s beliefs were irrational to the point of being delusional.  He also accepted expert evidence that showed the Testator was suffering from an affective disorder which included a complex grief reaction and depression which impaired her testamentary capacity.

Ms Bond’s brother appealed the decision on the grounds that the County Court Judge should not have applied the Banks v Goodfellows test and instead should have applied the test under the Mental Capacity Act 2005.  He also argued that the Judge had misapplied the test regarding whether the Testator suffered from delusions when he said it was not necessary to prove that she could not be talked out of her beliefs.

The High Court’s ruling

The High Court reviewed the case law which confirmed that the Banks test had not been superseded by the Mental Capacity Act 2005.  Under the Banks test, the following needs to be present for testamentary capacity to exist:

  • The Testator must understand the nature of making a will and its effects.
  • The Testator must understand the extent of the property of which they are disposing.
  • The Testator must be able to understand and appreciate the claims to which they ought to give effect (i.e. who can bring a claim against the Will).
  • The Testator must have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of their property by Will.

The Court observed that there was nothing within the Mental Capacity Act 2005 indicating that determining the validity of a Will was one of its purposes or powers.  Although it was important not to simplify the distinction between the test for capacity under the Mental Capacity Act 2005 and the Banks test to merely one of whether the person whose capacity is in question is living or dead, it was relatively clear from the terms of the Act that Parliament did not intend to alter the common law test for testamentary capacity provided by the 152-year-old case.

Regarding the correct test for delusion, the Court once again turned to an ancient case, that of Dew v Clark and Clark 162 E.R. 410, [1826] 1 WLUK 63 which established the legal concept of ‘insane delusion’ –  a Testator’s false conception of reality that may invalidate a Will altogether, or one or more of its provisions.  For a delusion to exist, it had to be:

  • more than a simple mistake that could be corrected
  • irrational and fixed in nature, and
  • out of keeping with the Testator’s background.

Justice Falk concluded that Dew did not lay down an absolute rule that a delusion could only exist if it were shown that it was impossible to reason the Testator out of the belief. 

The case was adjourned for three months to offer the siblings a chance to reach an agreement without the expense and distress of a further Court hearing.

Comments 

This case is one of many clarifying that the Banks v Goodfellow test remains good law in testamentary capacity cases.  Further test cases will inevitably be brought in the future, however, for now, the Courts have made clear that Banks may be an ‘oldy’ but it is still a ‘goody’.

Please note that this blog is intended for information purposes only and does not constitute legal advice. 

A Two Minute Guide To The Domestic Abuse Bill 2021

One of the unspoken tragedies of the Coronavirus pandemic is the dramatic increase in domestic abuse. According to a House of Common’s Insight,  although there is no official data so far on the impact of lockdown on domestic abuse, the Office for National Statistics (ONS) reported that by mid-May 2020, there was a 12% increase in the number of domestic abuse cases referred to victim support. And between April and June 2020, there was a 65% increase in calls to the National Domestic Abuse Helpline, when compared to the first three months of that year.

For many years, women’s groups, Family Law Solicitors, and law enforcement agencies have asked for tougher legislation to protect victims.  Former Prime Minister, Theresa May took up the cause and in July 2019 introduced the Domestic Violence Bill 2019-21 to the House of Commons. On 29 April 2021, the long-awaited Bill received its Royal Assent.

On the day Royal Assent was received, the Domestic Abuse Commissioner, Nicole Jacobs, said:

“Today marks an historic moment for victims and survivors of domestic abuse when change is needed the most.

The act sets out my legal powers which I will use to support all victims across England and Wales by first tackling the ‘postcode lottery’ of services.

So many campaigners, charities and individuals have worked incredibly hard to make the bill as robust as possible and there is no doubt that the legislation, which now includes non-fatal strangulation as a standalone offence, is much stronger as a result.

Legislation won’t transform things overnight and we know there is more to do, so and I will work with partners to advocate for further changes.”

The Domestic Abuse Act (DAA) 2021 is wide-ranging.  It creates new offences, extends existing law, and amends other legislation.  Its main provisions include:

Domestic abuse and economic abuse have been defined

For the first time, domestic abuse has been defined in legislation.  A definition of economic abuse is also provided:

Definition of “domestic abuse”

(1) This section defines “domestic abuse” for the purposes of this Act.

(2) Behaviour of a person (“A”) towards another person (“B”) is “domestic abuse” if—

          (a) A and B are each aged 16 or over and are personally connected to each other, and

          (b) the behaviour is abusive.

(3) Behaviour is “abusive” if it consists of any of the following—

          (a) physical or sexual abuse;

          (b) violent or threatening behaviour;

          (c) controlling or coercive behaviour;

          (d) economic abuse (see subsection (4));

          (e) psychological, emotional or other abuse;

and it does not matter whether the behaviour consists of a single incident or a course of conduct.

(4) “Economic abuse” means any behaviour that has a substantial adverse effect on B’s ability to—

          (a) acquire, use or maintain money or other property, or

          (b) obtain goods or services.

(5) For the purposes of this Act A’s behaviour may be behaviour “towards” B despite the fact that it consists of conduct directed at another person (for example, B’s child).

The police and the Courts are given greater powers

The police and the Courts are at the heart of protecting victims of domestic abuse. Under the DAA 2021, the police can issue Domestic Abuse Protection Notices, providing victims with immediate protection. The Courts can make a Domestic Abuse Protection Order that demands perpetrators take responsibility for their actions and seek mental health support and/or drug and alcohol rehabilitation if required.

Domestic abuse victims to be given housing priority

Local authorities will have to prioritise those who have been made homeless due to abuse. The DAA 2021 also places a duty on local authorities to ensure victims receive therapy, advocacy, and counselling in safe accommodation.

Non-fatal strangulation is now an offence

The DAA 2021 has made non-fatal strangulation an offence and expanded the scope of the offence of ‘revenge porn’. Furthermore, the defence of “rough sex gone wrong” in cases where death or serious injury occurs has been tightened. 

Perpetrators can no longer cross-examine victims in person

Being cross-examined by an abuser in Family Court proceedings is incredibly traumatic for victims. The DAA 2021 amends the Matrimonial and Family Proceedings Act 1984 barring anyone convicted of, given a caution for, or charged with a domestic abuse offence from cross-examining in person a witness who is the victim or alleged victim of the abuse, and vice versa. The Court can provide alternatives to cross-examination or appoint a Solicitor to undertake cross-examination of the witness.

Victims will also be given further protection from intimidation by having access to special measures such as being able to give evidence via video link and protective screens.

Children recognised as victims of domestic abuse

Children who hear, see, or experience the impact of domestic abuse are recognised as victims under the DAA 2021.

Final words

Domestic abuse is a scourge on all societies and does not discriminate against sex, age, race, or sexual preferences. The DAA 2021 has been long anticipated and provides robust measures to further protect victims.

If you or your children are in immediate danger, please call 999 and ask for the police. You can also call the 24-Hour National Domestic Violence Helpline on 0808 2000 247.

Further help and support are available from the below organisations.

National Centre for Domestic Violence (NCDV) – 0800 970 20 70

Refuge – 0808 2000 247 (24 hours)

Women’s Aid 0808 200 0247 (24 hours)

ManKind – 01823 334 244

Galop LGBT Abuse Helpline – 0800 999 5428

To make an appointment with one of our Family Solicitors based in North London please email or phone 020 8349 0321.

Tax and Trusts in the Cryptic Cryptosphere

Bitcoin, Ethereum, even Dogecoin – many will have been scratching their heads in recent months over the latest mania to grip the nation and the wider financial community. We could talk about non-fungible tokens (also known as NFTs), but it is perhaps best to leave that aside for now. This article looks at the growth of cryptoassets and it can form part of an estate for tax purposes. 

Current estimates put the market capitalisation of all cryptoassets at around $2 trillion following an astronomical surge in interest and investment so far in 2021. This burgeoning market and its underlying asset class is the internet’s gold with a new generation of investors rushing to reap the initial gains, even with the plentiful supply of critics and naysayers.

What might appear to be 2021’s version of the late 1990s dotcom bubble or 1636’s tulip mania, institutional investment is on its way and, with that, wider societal acceptance and faith in this new asset class. By way of comparison, the total value of the world’s gold is estimated to be around $9 trillion and the value of all global investments (including publicly traded shares, bonds and real estate etc) is around $360 trillion. By comparison, the market capitalisation of cryptoassets is not yet even 25% the size of gold and less than 0.3% of the value of all globally invested wealth.  

To understand cryptocurrency, let us consider gold further. Gold has been in circulation for  the purposes of trading and as a store of value since time immemorial. It is a curious metal as it serves little practical purpose in industry, but it has retained its value over time due to two fundamental characteristics: its attractive appearance and use in jewellery and, most importantly of all, its finite supply. Markets fluctuate, but supply and demand are its essential forces. For what is a marketplace other than the convergence of human sentiment and feeling in a financial context? For there to be demand for gold, there has to be widespread faith and acceptance not just in the value of the asset but also the knowledge that you own something that not everyone has but that everyone, potentially, wants. Enter cryptoassets…

Let us talk tax, shall we?

Rather than delving too deeply into this cryptic world and championing its merits as an asset class, let us turn to the more wearisome world of tax and estate planning.  We are witnessing a seismic transfer in wealth from traditional capital assets to cryptoassets and investors are increasingly asking how their assets might be taxed and how they should be held both during their lifetime and on death.  

First and foremost, what is a crytoasset? HMRC appear to have also been scratching their institutional head in recent years and perhaps, to the displeasure of some, we finally have some certainty on their interpretation. Of course, we should not forget that this is a fast changing area and HMRC’s interpretation is not yet enshrined in law. We should not, however, underestimate HMRC’s efforts to legislate in the absence of legislation

Importantly, HMRC does not consider cryptoassets to be currency or money.

For individuals, anyone disposing of cryptoassets will be subject to UK capital gains tax (CGT) on the gain, and the gain should be reported on their self-assessment tax return.

There is some possibility, however remote, that HMRC considers that an individual’s activities fall under the category of trading as they are buying and selling the assets on an ongoing basis. HMRC will evaluate each case on its fact and will consider factors such the frequency, level of organisation and sophistication whereby such activities could constitute trading. To the disappointment of avid crypto investors, for UK tax purposes, profits will be treated as income and so be subject to UK income tax and not CGT. This would invariably mean that trading in cryptoassets attracts a higher rate of tax than if an investor bought cryptoassets and disposed of their holdings as a later date. Investors should be aware of this possibility at the outset.

There is, however, one curious cultural characteristic of the crypto community: HODLing. This term was popularised after an early crypto investor explained that his strategy with Bitcoin was to HODL, a clear misspelling of the world HOLD. In more recent years, HODL has become the defining feature of the crypto world and now means that you intend to Hold On for Dear Life and therefore never sell! The expectation is that by HODLing, investors will limit the supply of cryptoassets on the market and therefore inflate the price as demand continues to rise.

Now, naturally, if an investor is ‘sitting’ on and not realising a gain then no tax arises in such circumstances. However, given the UK’s current debt crisis, perhaps the government will ponder a wealth tax which could target holdings of wealth including cryptoassets. This is will be an area to watch in the coming months.

Where is my asset located for tax purposes?

For the majority of clients who are UK resident and domiciled for UK tax purposes, HMRC will treat your disposals of cryptoassets in the same way that they would treat any gain arising anywhere in the world, namely that it falls into the UK tax net. For UK resident non-UK domiciled clients, the answer is far less straightforward. To summarise, individuals who are resident but not domiciled here will pay tax only on their UK source income and gains and on non-UK source income and gains only to the extent that they are remitted (ie brought back) to the UK.

As for cryptoassets, how do we determine whether they are UK situated or not and therefore whether they fall into the UK tax net for non-domiciled individuals? Cryptoassets are intangible and digital assets comprising a set of code that is recorded on a decentralised ledger also known as blockchain. As there is no central register or geographically identifiable ledger, the usual rules on determining the situs of intangible assets are thrown up into the air.

HMRC released guidance at the end of 2019 setting out their view that the taxpayer’s cryptoassets are situated in the jurisdiction of the taxpayer’s residence. We assume that HMRC is referring to tax residence (determined by the UK’s Statutory Residence Test) and not habitual residence. The consequence of this, to the extent that it is upheld and perhaps passed into law at a later date, is that a non-domiciled individual who is tax resident in the UK will pay UK tax on the disposal of their cryptoassets merely because they are resident in the UK for tax purposes. This is a departure from the typical rules relating to the remittance basis of taxation (applicable to many UK resident non-doms) such that these individuals can no longer shelter ALL of their offshore income and gains from the UK tax net.

A practical example best illustrates this departure from the rules. Mr X has been tax resident in the UK for the past five years but has not acquired a domicile of choice in the UK and nor is he considered deemed UK domiciled under the 15/20 year rule. Mr X makes a purchase of 50 ETH (the underlying coin on the Ethereum blockchain platform) and the transaction takes place through an offshore exchange using funds from an offshore bank account so that there is no UK nexus to the transaction. A year later, Mr X decides to dispose of his ETH, triggering a substantial gain and Mr X subsequently transfers the sale funds from the exchange to an offshore bank account. In such circumstances, as Mr X is UK tax resident as the time of the disposal he will have made a remittance of the 50 ETH and the gain will be subject to CGT in the UK irrespective of the offshore element and the applicability of the remittance basis of taxation.

What about succession planning and trusts?

This is where the complication really begins to add up. Focusing on lifetime trusts and the relevant property regime (effectively UK trusts with non-excluded property), an individual (the settlor) is liable to a UK inheritance tax (IHT) entry charge of 20% when assets go into the trust, to the extent that the value of the assets exceeds the settlor’s available nil rate band (currently £325,000). If the value of the assets falls below the available nil rate band, it follows that there is no immediate charge to IHT.

The transfer into trust may also trigger a gain for CGT purposes when the cryptoassets are settled on trust, as the transfer is treated as a disposal. In this scenario, it may be possible to claim hold-over relief. This relief has the effect of deferring CGT whereby the base cost will be the original acquisition cost and this is used when calculating the CGT due on a subsequent distribution from the trust. The relief is not obtained automatically but is instead claimed by the trustees and the recipient of the asset and notified to HMRC following certain formalities.

The availability of the nil rate band to mitigate IHT and hold-over relief to defer CGT are all well and good, but there is one major stumbling block – valuation. Using residential property as an example, the market for bricks and mortar is steady and stable, and a valuation three days before a transfer into trust is unlikely to change when the transfer is effect. With publicly listed shares, the market opens and closes at fixed times (closed over weekends and Bank Holidays) and so a valuation at market close is not a complex scientific endeavour. With cryptocurrency, the challenges are far greater. For starters, the market never closes as there is no centrally located exchange. To make matters worse, the crypto market remains extremely volatile and a so-called well-performing cryptoasset could swing 10% up or 10% down in one day – perhaps even as much within a single hour at midnight when UK taxpayers are asleep!

How, therefore, is the value of cryptoassets determined for the purposes of creating or even dismantling trusts? The same issues arise with Will trusts. If, say, the testator creates a discretionary trust for the benefit of his children on death, do we look at the very minute of death to determine the value of the cryptoassets going into trust? Many questions remain and it is beyond doubt that HMRC will be thinking of ways to claw as much tax as possible, however difficult it may be to value these assets.

Practical considerations for Cryptoassets 

In an increasingly digitised world, passwords are practically as valuable as the assets that they protect. Cryptoassets are now commonly stored in a digital wallet, which can be stored online or on external hard drives. Storage and security are clearly of paramount importance to the crypto world. The major takeaway from this is that cryptoassets are only valuable if you have the key to access them. If an individual owning £1 million of Bitcoin does not share the password and provide access to his intended beneficiaries of his estate, the estate would be treated as if it never owned the Bitcoin and the beneficiaries would never receive the benefit. The Bitcoin would be irretrievably lost and no value could ever be obtained. Of course, this would mean that the Bitcoins cannot attract IHT on death as the value has been lost. This is arguably one of those circumstances where a substantial IHT bill would be very well received.

Take the example of James Howells from Newport, Wales. Mr Howells owned 7,500 Bitcoins on an external hard drive, which he accidentally threw away in 2013 when cryptocurrency was worthless by today’s standards. On today’s prices, this crypto holding would be worth somewhere in the region of £300 million and unless the hard drive can be extracted from landfill and the data recovered, that value will be forever lost.

For this reason, it is essential that clients consider leaving a confidential side letter to the executors and trustees of their estate setting out their passwords and any other relevant information relating to access of valuable data and cryptoassets. Of course, this document will have to be kept under lock and key, given its implicit value, with access to it only shared with only the most intimate family members.

Our specialist tax advisers at OGR Stock Denton will be well placed to guide you through the tax regime relating to cryptoassets and would be delighted to advise further. 

If you would like to discuss any of the above issues, please contact Ben Rosen, on 020 8349 0321 or by email

Please note that this blog is intended for information purposes only and does not constitute legal advice. 

Understanding Testamentary Capacity

The number of Wills being challenged over the past decade has risen consistently, and it is easy to see why.  The stakes are much higher given the increase in house prices, meaning that many peoples assets are now worth hundreds of thousands (if not millions) of pounds. Furthermore, the younger generation are struggling to get on the housing ladder, and are increasingly reliant and / or expecting to receive an inheritance to do so. At this point, you may be wondering what Will disputes have to do with testamentary capacity. The the answer is that if a Will is not entered into with full understanding, it may be challenged and be declared invalid. 

What is testamentary capacity, and how is it established?

The word ‘testamentary’, in this case, refers to the act of bequeathing through a Will.  ‘Capacity’ refers to the cognitive ability of the testator (the person making the Will) to enter into the Will in a way that they fully understand.  Hence if a Will is entered into by a person who lacks the mental capacity to comprehend the implications of what is being stated, this would be considered to be a lack of testamentary capacity and will likely render the Will invalid. 

If the last Will is declared invalid the estate will be administered under the terms of the previous Will (if one exists) or under the rules of intestacy. This is a formula sued to distribute an estate if there is no will.  

Solicitors and other legal practitioners specialising in Wills must check that they are satisfied someone has testamentary capacity when taking instructions for a Will for a client. By doing so, its validity is less likely to be challenged following death. 

The risk with online and DIY Wills is that, in addition to the lack of professional legal guidance to ensure the Will is drafted to reflect all of the necessary provisions and life scenarios for your situation, it will lack evidence that checks were undertaken to verify capacity.  A professional Wills Solicitor will go out of their way to secure the proof needed, including requesting contemporaneous medical opinion, asking a medical professional to witness the Will, and attaching any other proof of capacity to the Will.

There are two main tests used by the Courts to prove testamentary capacity:

Banks v Goodfellow Test (Case law test)

 This common law test relates to the case of Banks v Goodfellow (1870), which used the following criteria to test for the existence of testamentary capacity:

  • The testator must understand the nature of making a will and its effects.
  • The testator must understand the extent of the property of which they are disposing.
  • The testator must be able to understand and appreciate the claims to which they ought to give effect (i.e. who can bring a claim against the Will).
  • The testator must have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of his property by Will.

Despite being over 150 years old, the Banks v Goodfellow test has stood the test of time due to its clarity, the fact it is based on case law principles going back three centuries, and because it covers the elements necessary to establish an all-round understanding of what is being entered into.

The Mental Capacity Act 2005 (MCA 2005)

 The MCA statutory test uses five core principles to establish mental capacity, as follows:

  1. A presumption of capacity – everyone has the right to make his or her own decisions and must be assumed to have capacity unless proved otherwise
  2. The right for individuals to be supported to make their own decisions – people should be given the necessary assistance before it can be concluded they are unable to make their own decisions
  3. Individuals have the right to make what might be seen as eccentric or unwise decisions
  4. Best interests – anything done for or on behalf of people without capacity must be in their best interests; and
  5. Least restrictive intervention – anything done for or on behalf of people without capacity should be the least restrictive of their basic rights and freedoms.

The MCA 2005 test for capacity was not intended to replace the Banks v Goodfellow test; rather the intention was to allow judges to make their own decision as to which would be most applicable.  However, the High Court case of James v James and others [2018], confirmed that the Banks v Goodfellow test should be applied when assessing mental capacity in relation to making a Will.

Ensuring testamentary capacity for your Will

Establishing testamentary capacity at the time of Will creation will mitigate the potential for it to later challenged.  For solicitors, ensuring their client understands what they are entering into and providing supporting evidence where necessary is a paramount consideration.  By failing to undertake this key step, a well-drafted Will, with all elements considered, witnessed, and signed correctly, could be rendered useless via a challenge.  Don’t cut corners and allow your Will to be judged invalid due to concerns over capacity – your loved ones deserve certainty that your wishes were made with sound mind and judgment.

If you would like to discuss any of the above issues, please contact Ian Pearl, on 020 8349 5506 or by email

Please note that this blog is intended for information purposes only and does not constitute legal advice. 

Survey shows online sexual harassment increased during coronavirus lockdowns

Few people would argue that the Internet has shaped and transformed the 21st century.  From shopping to researching, healthcare to defence, the online world has changed almost every aspect of our lives; sometimes for the better, and occasionally for the worse. It has long been recognised that many school children are tormented by online bullies.  Home used to be a safe haven but thanks to the Internet, tormentors can pursue students at home.  And following the surge in homeworking, driven by the Coronavirus pandemic, a new study shows that those suffering from workplace sexual harassment are also now having to deal with such behaviour inside their own four walls.

A recent survey by the Rights of Women charity lays bare the extent of the online sexual harassment problem.  It shows:

  • “45% of women experiencing sexual harassment, reported experiencing the harassment remotely, i.e. sexual messages (e.g. email, texts, social media); cyber harassment (e.g. via Zoom, Teams, Slack etc); and sexual calls.
  • 42% of women experiencing sexual harassment at work have experienced some to all of the harassment online.
  • 23% of women who have experienced sexual harassment reported an increase or escalation whilst working from home, since the start of lockdown (23rd March 2020).”

Furthermore, 72% of women do not feel that their employer is doing enough to combat online sexual harassment.  A hospital worker spoke of her experience, stating:

“As the pandemic was declared, all attention was diverted in managing clinical pressures and needs as I work in a hospital. This meant an investigation was not started for months. In the meantime, I felt unprotected as there was no system in place to remove the harasser from the department whilst an investigation was pending. …There is no policy in this mammoth organisation that addresses sexual harassment.”

Deeba Syed, Senior Legal Officer, Rights of Women, said:

“These statistics echo what women have been telling us already, sexual harassment at work happens online as well as in-person. Although more women are working from home, online sexual harassment has increased and women continue to suffer sexual harassment despite the Covid-19 pandemic. Women working from home have seen their harassers take to Zoom, Microsoft Teams, social media, messages, and phone calls, to continue the torrent of abuse.”

For employers, protecting employees from online sexual harassment presents yet another challenge that must be addressed.  Failure to do so could result in expensive, stressful, and reputation damaging Employment Tribunal claims.

What are employers’ duties regarding workplace sexual harassment?

Sexual harassment is illegal under the Equality Act 2010.  Sexual harassment can arise where there is:

  • Unwanted conduct of a sexual nature that has the purpose or effect of violating the victim’s dignity or creating an intimidating, hostile, degrading, humiliating, or offensive environment for the victim.
  • Less favourable treatment – this may occur because of the victim’s rejection or submission to the conduct as described above.

Employers have a duty to prevent workplace sexual harassment not only at the workplace premises but also at work-related events such as Christmas parties and on social media.

To protect their employees and commercial reputations, employers must take ‘reasonable steps’ to prevent sexual harassment from occurring.  Doing so may also act as a defence should an employee bring a sexual harassment claim against them.  Examples of ‘reasonable steps’ include creating a well-drafted sexual harassment policy and ensuring that policy is well communicated throughout the business.  It is also important to have training in place to help managers spot signs of harassment (both in person and online) and appoint one or two people to act as a safe person to go to if an employee wants to talk about concerns regarding a colleague’s behaviour.  An alternative is to publicise details of an outside organisation that can provide a confidential person to talk to.

Talk to an Employment Solicitor regarding sexual harassment

In this age of #MeToo, employers must be vigilant in their anti-sexual harassment policies and procedures.  If you have received a complaint about online sexual harassment, speak to an experienced Employment Law Solicitor about the best way to manage the situation.  The initial steps you take in handling a sexual harassment claim can make a significant difference as to whether an Employment Tribunal claim is brought.

If you would like to discuss any of the above issues, please contact Susan Bernstein, Employment Partner on 020 8349 5480 or by email

New 95% Mortgage Scheme Launches

The new government-backed 95% mortgage scheme launched on 19 April 2021.  High street lenders including Lloyds, Santander, Barclays, HSBC, and NatWest have all signed up to the scheme.  OGR Stock Denton’s residential conveyancing team are highly respected panel members on all four aforementioned lenders.

With studies showing that 80% of renters are now actively saving for a deposit, the ability to borrow up to 95% of the value on a property will ensure more people realise their dream of owning their own home.

How does the 95% mortgage scheme work?

With rents rising every year, the challenge to getting a foot on the property ladder is saving the necessary deposit.  During the Coronavirus pandemic, 95% mortgages virtually disappeared, putting a further barrier between Generation Rent and their desire for homeownership.  At the most recent Conservative Party Conference Boris Johnson made a promise to tackle inequality in the housing market.  By providing a government-backed low deposit scheme for properties purchased for £600,000 or less, thousands more will be collecting keys from an estate agent between April and when the scheme closes in December 2021.

Susan Allen, CEO of Retail and Business Banking at Santander gave her backing to the scheme, stating:

“We know that raising a large deposit can often be challenging for potential home buyers, so we’re pleased to be part of the government’s Mortgage Guarantee Scheme offering a range of 95% mortgages to help both first-time buyers and home movers.

As one of the UK’s largest mortgage lenders we see how important homeownership is to our customers and we use our wide experience and expertise to support them throughout the home buying process.”

How OGR Stock Denton’s Conveyancing Lawyers can help you with the 95% government-backed mortgage scheme

 With years of experience in the residential property market, our Residential Conveyancing Solicitors will ensure your 95% mortgage application and property purchase transaction goes through smoothly.  You can be confident that we will apply for all the necessary property searches and carefully examine the title and explain any issues that may affect your future enjoyment of the property.  As a full-service law firm, we can also assist you with other legal issues relating to your new home, for example drafting a Will or a Pre or Post-Nuptial Agreement.

Reacting to the news that the 95% mortgage lending scheme has been launched, Michael Stock, who heads up our Property Department comments:

“The Government’s Mortgage Guarantee Scheme will provide the boost many prospective home-buyers need to get on the property ladder.  However, no property acquisition is without risk.  It is essential to have an experienced Conveyancing Solicitor examine the mortgage offer and the details of the property to ensure the risk of falling into negative equity is mitigated.  Most of our clients and their families remain with us long-term because they appreciate that we take the time to get to know them and trust that they will be swiftly notified regarding any concerns around their property purchases.”

Whether you are buying a pre-existing home or a new build, our North London based Property Lawyers will provide expert advice and ensure your interests are fully protected.

To make an appointment to discuss any aspect of residential property law please email or phone 020 8349 0321.

 

OGR Stock Denton successful in Road Traffic Accident (RTA) compensation claim for client

OGR Stock Denton has once again successfully acted for a Claimant in a Road Traffic Accident (RTA) compensation claim against a Highway Authority. The firm’s Personal Injury solicitors represented a motorcyclist whose vehicle slipped on a manhole cover. The accident resulted in the client suffering a broken knee and wrist. Sitting in the Central London County Court, Mr Recorder Stephen Jourdan QC complimented counsel on the “clarity and cogency” with which the case was presented and awarded the Claimant £66,000 plus interest and costs.

Lead Partner Stephen Silverman, who has over 30 years’ experience in personal injury and dispute resolution law, was disappointed that the local authority did not make an early admission of liability to allow the team to arrange interim payments to cover the cost of the client’s rehabilitation. 

Stephen commented:

“As we often deal with highly complex personal injury cases, not only do we focus on getting significant compensation, but aim to secure an early admission of liability so the client can undertake a rehabilitation programme as soon as possible. Our clients’ health and wellbeing are incredibly important to us. Our solicitors are well known, not only for actively pursuing compensation but also for caring deeply for clients and their families at a time when their lives have often been turned upside down.”

Regarding his most recent success, Stephen went on to say:

“The importance of this case is that it recognises the obligation of Highway Authorities to maintain all aspects of a highway, including manhole covers. In this case, despite regular inspections, Transport for London failed to identify that the manhole cover was worn and polished so as to present a reasonably foreseeable and real danger to road users.

As a result of our successful arguments and expert evidence at trial, our client was able to recover damages for his pain and suffering, as well as for financial loss, including cost of repairs to his motorcycle  and loss of earnings, enabling him to move on from this traumatic incident.”

Working with Stephen and his team was Barrister, Tom Bourne-Arton, who is stated in Chambers and Partners as being:

“….efficient and sensible.” “He is quick to grasp issues and very efficient in turning work around.”

Thanks to the formidable reputation of its Personal Injury Lawyers, OGR Stock Denton can instruct highly experienced and respected Counsel such as Mr Bourne-Arton as well as top medical and Road Traffic Accident experts. This ensures our Personal Injury team, who are also members of APIL, can build robust cases and do their best to establish liability and secure the highest compensation available for their clients.

To make an appointment to discuss any aspect of Personal Injury or Road Traffic Accident claims please send us an email or phone 020 8349 0321.