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Yearly Archives: 2018
It’s Blockchain your Honour
In September 2018, China’s Supreme Court ruled blockchain records as admissible legal evidence. The Internet Courts in China can now use blockchain records to settle internet-related legal disputes.If the relevant parties collect and store their data via blockchain, with digital signatures, reliable time stamps and hash value verification or via a digital deposition platform and can prove the authenticity of their technology, it will be recognised, the Supreme People’s Court statement said.This may not be a surprise to some, as four months ago, China’s first Internet court in Hangzhou, ruled that evidence which has been authenticated using blockchain technology is legally binding.(Block)Chain Reaction?The application and admissibility of blockchain in the Court room has yet to be widely seen.Though blockchain records have been declared admissible as evidence by the US state of Vermont, and China’s latest ruling shows an appetite for the Courts accepting the new technology.In Vermont, the state signed a bill into law which allowed a ‘digital record electronically registered in a blockchain’ to be ‘self-authenticating’ ‘if it is accompanied by a written declaration of a qualified person, made under oath’. The Court is still requiring human verification of the system, and does not yet irrefutably trust the technology, but it is certainly a step in the right direction. Quick off the starting BlockCourts will have to get familiar with blockchain following its rapid development and uptake. No doubt Smart Contracts will bring with them the same disputes as other contractual agreements, and when these come to fruition, new technology will be at the heart of any case.The adoption of blockchain based technology to store corporate records, such as stock ledgers, books of accounts and minutes (as has been done by Delaware’s General Corporate Law in the US) could lead to a wide variety of cases involving issues of business ownership and shareholder disputes requiring blockchain evidence to be admitted.In the UK, the Land Registry’s steps towards a register based on blockchain (most recently seen in their appointment of software company Methods in their project Digital Street) may reduce some disputes, as they progress towards complete and accurate records, but will also lead to cases where title records stored on a blockchain need to be admitted as evidence.The UK Government has also disclosed plans to conduct a pilot project for storing digital evidence on a blockchain, which was revealed in an announcement by Balaji Anbil, Head of Digital Architecture and Cyber Security at Her Majesty’s Courts and Tribunals Service (HMCTS). The system intends to create a digital evidence audit to preserve the digital chain and provide a “chronological record of system activities which capture how digital evidence has been created/accessed/modified by which entity, from what location, in such a way to enable the reconstruction and examination of the sequence of events, and actions leading to the current state of the digital evidence.”This move is encouraging in terms of the UK Court’s potential to accept blockchain evidence, which would be rendered necessary if such a system was adopted.Whilst the UK Court seems keen to embrace technology from an administrative point of view, it will be interesting to see how the Court reacts to the evidential questions the new technology will bring and the implications of architectural decisions in the technology, such as open or closed networks, access to keys and tokens.
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Is Blockchain technology set to revolutionise the art market?
A notable trend since Bitcoin gained its popularity has been an incredible rise in the interest in the technology behind Bitcoin known as Blockchain, which is the “thing” which allows cryptocurrencies to function. Some statistics indicate that the global blockchain …
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Try before you buy?
The Express has commented on the data released by trade lending body UK Finance which demonstrates that the number of first time buyers in August was the highest monthly level since June 2017. Whilst this is not a particularly long time, it may demonstrate to the Chancellor that the changes to the taxation of properties owned by investors is working to assist people get on the property ladder.If the Chancellor decides the existing changes have not made enough of a difference he may well consider implementing the rumored proposal to give a capital gains tax exemption to landlords who sell property to tenants who have lived in the property for three years or more. It has also been suggested that the exemption is split between the landlord and tenant so that the tenant has a contribution towards their mortgage deposit.This would put tenants in a very strong bargaining position if they wanted to buy the properties they have been renting, but the overall effect on the property market is something the chancellor will want to consider carefully.The fact that the phrase ‘housing ladder’ is thrown about so often demonstrates how we in the UK treat our homes – always an investment rather than just a place to live, waiting to move to the next ‘rung’. The UK economy in turn in intrinsically reliant on the property market ‘working’ and further taxes on landlords could be the straw that breaks the camel’s back.Landlords and tenants alike will be waiting with baited breath for the budget to see if the proposals are to be implemented, however the effect of them will take far longer to be realised.
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Careful estate planning can save you a princely sum
Whilst the focus on today’s news should of course be on congratulating the happy parents-to-be, it is also a good opportunity to consider the impact of mixed domicile marriages on estate planning.The question of Megan’s domicile remains an open one, depending on the extent to which one considers marrying into the Royal Family an intention to be closely connected to the United Kingdom. Whilst their children will be UK domiciled under UK law (because, generally speaking, domicile of origin reflects the domicile of the father), Megan could find herself with a different domicile to that of her children.For couple in a similar scenario, this can have a significant impact on estate planning opportunities, for example UK domiciled spouses only have a limited spouse exemption when passing assets to their non-UK domiciled spouse. It may also mean navigating the choppy waters of double taxation relief as more than one jurisdiction seeks to claim taxing rights over the same assets.One expects that the couple will not be lacking in professional advisors however. It is also worth remembering as well that Megan will become deemed UK domiciled for IHT (as well as all other UK taxes) after she has been resident for 15 out of the last 20 UK tax years. This will cause many of the UK estate planning complexities to fall away, albeit that it may bring with it a host of other matters to consider.
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Don’t e(stop) til you get enough
This case shows that the equitable doctrine of proprietary estoppel can still play a significant role in deciding court cases, which runs contrary to the general idea of testamentary freedom.The doctrine provides that, where a person has been promised an interest in property and has, in reliance on it, incurred expenses or made sacrifices that he would not otherwise have made, the law provides a remedy. It is a common fact pattern that an individual is promised that they will receive a house or property on the death on the death of the current owner, and that individual then does something in reliance on that promise (such as working for less pay). Courts have a wide range of remedies available to resolve such disputes, which can include transferring the entire property to the claimant individual in certain circumstances.Cases such as these should remind practitioners to take care to ensure that clients’ testamentary documents and letters wishes are up-to-date. Whilst these may not be irrebuttable, a later testamentary document will go a long way towards confirming the client’s true intentions in the face of opposing arguments.
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Estate planning need not be taxing
The fact that nearly seven million parents have given children an early inheritance shows that lifetime estate planning is not something which is restricted to the high-net worth and ultra-high net worth community.Assisting children to get onto the property ladder and supporting grandchildren through education and university are two of the most common reasons for passing wealth down through the generations.Independent financial and legal advice should be sought before carrying out any significant estate planning, however this research shows that it is a financial tool that is harnessed by millions and could surely be used by more than that.
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HMRC home in on Airbnb tax affairs
The Financial Times reports this morning that HMRC are enquiring into the tax affairs of Airbnb. Of particular interest to HMRC may be the low profits as against high revenues, something which was criticised last year by Bruno Le Maire, the French Finance Minister.The investigation serves as a timely reminder to those that use the service to rent their rooms or entire homes in the UK, to ensure they are declaring the income generated and paying the appropriate tax.Rent-a-room relief is set at £7,500 per year so those earning under this amount (or half if the income is shared with another person) on Airbnb do not need to file a return. Landlords who do not live in the home they rent out do not qualify for the relief.For those that are unable to claim the relief, or that earn over the threshold, a tax return must be filed. Some may wish to consider whether their tax liability is lower by claiming the relief, or by being able to deduct expenses in the usual manner, something which is not available under the rent-a-room scheme. As the popularity of Airbnb rises, HMRC may continue to take an interest in the tax revenue taken and therefore ensuring compliance with the rules will only become increasingly important for users of the service.
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Sister (P)act 2: Back in the Co(habit)ation
Some people are using the extension of the civil partnership rules to heterosexual couples as an opportunity to highlight the ways in which the rules on inheritance tax (“IHT”) favour married couples (or those in civil partnerships).Whilst it seems unlikely at this stage that the Government will submit to calls to allow siblings similar access to these IHT exemptions, it does raise the interesting ethical question about why avoiding IHT continues to be so closely linked to marriage or civil partnerships. The argument that it is to preserve family wealth does not hold, because IHT is taxed at 40% when the surviving spouse does eventually pass wealth down to children. Indeed, a married couple receives the exemption whether or not they have children, whereas a different individual may wish to pass assets to a loved niece or nephew via their own sibling. In the former scenario IHT is only taxed once (on the death of the surviving spouse), whereas in the second scenario HMRC takes a 40% cut twice.Given that the exemption simply requires that individuals be married or in a civil partnership, it begs the question of what the justification is for the continued generosity towards couples in the 21st century.
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Can it be right that average rents are 30% of a person’s income?
The BBC has published an article with some shocking statistics on the affordability of renting for young people.The article states that “a salary of £51,200 is needed to “afford” to rent a one-bed London home”. This is an astonishing figure, particularly when you consider that this could provide you with a 10% deposit for a half million pound house (should you be able to save up these monies instead of paying them on an annual rent).The report focuses on those in their 20’s, as recent studies have shown that they are more likely to rent.Collyer Bristow LLP has commissioned its own report looking into ‘generation rent’. A copy is available here.This report found that 100% of 20-24 year olds have aspirations of owning their own home. This seems an insurmountable task when you consider the huge rents they are expected to pay each year.Alex O’Connor, Partner in Commercial Real Estate said: “We all know that there is a housing crisis in the UK and that it is particularly acute in London and the South East. We have seen developers bring forward new tenures, such as dedicated Build-to-Rent schemes, but home ownership remains the ultimate goal.”“It is interesting that all of our panel’s 20-24 year olds say that they will own their own home, only for those hopes to be dashed when the reality of buying a property hits home. That picks up slightly, perhaps as our panel start to marry and think about starting a family.”Whilst measures are being implemented, new types of tenure considered and there are new and creative ways being introduced to improve the market, the housing crisis is not going to disappear and something needs to be done urgently if young people’s dreams of owning their own properties are to be fulfilled.
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A New Homes Ombudsman has been announced by government – but that’s about it!
The Ministry of Housing, Communities and Local Government made a new announcement on 1 October 2018.On the face of it, it is brilliant news. The announcement addresses the need for planning reform to provide the homes the country so desperately needs, measures to improve the safety of high rise buildings following the Grenfell Disaster and a ‘New Homes Ombudsman’.This new ombudsman is said to “champion the rights of homebuyers and help ensure that when they buy a new home they get the quality of build they rightly expect”. The announcement continues that “the New Homes Ombudsman will protect the interests of homebuyers and hold developers to account when things go wrong.”This sounds like great news for homebuyers and could help boost the market if buyer concerns over ‘dodgy developers’ are reduced. However, developers would be right to be slightly more sceptical about the announcement. This is because the government has stated that they intend to introduce legislation requiring developers to belong to a new homes ombudsman – and frustratingly, that is all the information there is at present!This leaves developers and home builders with the potentially onerous obligation of being required, by legislation, to belong to a watchdog but there is a complete lack of detail about that watchdog. There is no information as to how many watchdogs a developer will have to select from when they join, how the watchdogs will be made up or what powers they will have.This seems to be a bit like the recent announcement on ground rents – where a grand statement has been made but those it affects will have to wait some time (and presumably until after Brexit is sorted) until housing is back on the agenda and some clarity is finally given.
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