DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
The Review
for individuals and families
Property Alert New higher rates of Stamp Duty Land Tax Rebutting the myth of a common law marriage Till death do us part our assets Chelsea & Mourinho v Eva Carneiro Staying safe on your winter holiday
Winter 2016 1
THE REVIEW WINTER 2016
MEET THE CONTRIBUTORS
Bernd Ratzke
Suzanne Porteous
Joanna Farrands
Charlotte Plowman
Rhoderick McGrigor
David Ludlow
Managing Partner Client Services Corporate & Commercial T. 01483 464221 berndratzke@barlowrobbins.com
Trainee Solicitor Family T. 01483 543246 charlotteplowman@barlowrobbins.com
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Senior Residential Property Executive Residential Property T. 01483 523634 suzanneporteous@barlowrobbins.com
Senior Associate Probate, Wills & Trusts T. 01483 543229 rhoderickmcgrigor@barlowrobbins.com
Partner Family T. 01483 543223 joannafarrands@barlowrobbins.com
Partner Employment T. 01483 748502 davidludlow@barlowrobbins.com
DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
Dear Clients and other readers, Welcome to the Winter edition of our quarterly Review. We live in a changing, ever more multi-cultural society where some of the norms and expectation of the ‘baby boomer’ generation no longer apply. People are getting married later in life, if they choose to marry at all, and have different expectations about their careers and perhaps the permanence of the locality where they will live. The younger generation thinks of a world with far fewer borders as those with mobile skills follow the tides of the global economy. Perhaps it was always thus, before and after the Industrial Revolution, but at least these days there are plenty more ways to keep in touch than a ‘reverse charge’ telephone call to the parents. Our articles this month look at some of the consequences of that less structured living. What happens to the home for example if an unmarried couple separates and the property is owned by one and not both? What happens if a partner dies, perhaps fully intending that the surviving half should have his or her life insurance? The law perhaps does not always quite keep up with the pace of social change, though sadly where HMRC see a chance to extract tax from the increasing need for parents to help their children with a
first property purchase they do not fail to miss that opportunity, justified of course on the questionable policy ground that by making the purchase of a second home more expensive more people will be able to afford a genuine first property. Time will tell. In the meanwhile the prediction is that rents will rise to reflect the additional costs to landlords of buying a property for the lettings market. We also take a light-hearted look at the perils of getting on the ski-slopes and at upsetting Mr Mourinho, though as he has ceased to be ‘The Chosen One’ for Chelsea he is probably ‘spending more time with his family’. By the way, if any reader is left wondering what a ‘reverse charge’ phone call might be, please get in touch. The chances are you will be able to explain to me how to use the more obscure features of my iPhone. With best wishes,
Bernd Ratzke
Managing Partner Client Services
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THE REVIEW WINTER 2016
By Suzanne Porteous
T
he Government’s Autumn Statement announced higher rates of Stamp Duty (SDLT) would be charged on purchases of additional residential property where the purchase price is in excess of £40,000 such as buy to let properties and second homes. The new rules are expected to affect purchase transactions completing on or after 1st April 2016. The higher rates proposed will be 3% above the current SDLT rates although the final rules will be announced in the Budget on 16th March 2016. The additional 3% will be levied on all purchases which fit the Government’s
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criteria of a second home, i.e. those individual purchasers who on completion own two or more residential properties
and are not replacing their main residence. HMRC directs that the higher rates will not apply if you exchanged contracts on a purchase before 26th November 2015 and completion is anticipated on or after 1st April 2016. This will benefit buyers who have purchased properties ‘off plan’ and anticipated paying SDLT at the lower rate. We have outlined the following scenarios where buyers may have to pay the higher rate of SDLT.
DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
EXISTING OWNERS PLANNING TO BUY BEFORE THEY SELL
PARENTS HELPING THEIR CHILDREN PURCHASE PROPERTY
JOINT OWNERSHIP
Those who already own a home, and those with a main residence owning a second property for holiday or investment purposes, might be wondering if they will be caught by the new rules if they buy a new family home. The answer is ‘no’ provided they are ‘replacing’ their main residence for another, but there will be a cash flow implication if the new home is bought before the old one is sold. In that case the purchase would trigger the higher rate tax at the time of completion, but the HMRC consultation paper indicates that the additional 3% can later be claimed back from HMRC so long as you complete the sale of your old main residence within 18 months of completion of the new purchase. Many parents have helped their children get on the property ladder by taking out a joint mortgage and as a result Lenders very often ask parents to become co-owners with their children. In these cases, parents will effectively be purchasing a second home and thus will be caught by the higher rate tax. If a property purchase results in any one of the buyers owning two or more properties on completion, and again, they are not replacing their main residence the transaction will attract SDLT at the higher rate. The timing of the budget leaves little time to complete the purchase of a second property without incurring the additional tax charge which would explain why there has been a sudden urgency to complete purchases of second homes this side of April. Whether the proposed changes (if implemented) will have a significant impact on the buy to let market and the property market generally remains to be seen.
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THE REVIEW WINTER 2016
REBUTTING THE MYTH OF A COMMON LAW MARRIAGE
By Charlotte Plowman & Joanna Farrands
Cohabiting couples are the fastest growing family type in the UK. Figures from the Office for National Statistics show there are 3.2 million cohabitating couple families in the UK (November 2015). This is a 29.7% increase since 2005. Cohabiting couples have little legal protection when they separate; ownership of assets is decided by property law principles, rather than principles applied by the family courts for those divorcing. For married couples the court recognises a number of factors, including, most specifically, the needs of a financially weaker party who has given up work to raise a family. Conversely, when cohabiting couples separate the court has no discretion to make property adjustment orders. If a property is solely in one party’s name, then the other party could potentially walk away without anything unless there has been: 1. a financial contribution from the non-legal owner or some other common
If there are children from the relationship child maintenance will be payable, but there is no entitlement to spousal maintenance. Although, in cases where one party has wealth over and above reasonable needs, it is possible to bring an application under the Children Act for provision specifically for the child. This could result in an order for the other party to provide housing until the child is 18, however for average income families this is rarely a viable case to run. One way to try and prevent legal wranglings on separation is to have a cohabitation agreement drawn up. These allow the couple to regulate ownership of property and avoid any potential issues should they later separate. The Cohabitation Rights Bill is in its early stages of passing through Parliament and seeks to address the rights of cohabiting couples. Of course, cohabitation is not a new family type. Whilst it was not a socially accepted practice years ago, figures suggest the growing acceptance of cohabitation is perhaps having the long term effect of strengthening marriage for parties who go on to tie the knot. Divorce rates are currently at the lowest level for 40 years, although this may also be because there are simply less marriages.
intention that the non-legal owner should gain an interest in the property; and
2. evidence they relied on this to their detriment, for example contributing to household bills on the basis they did not have to worry about their living arrangements (which can be difficult to prove). 6
3.2million
There are 3.2 million cohabitating couple families in the UK Source: Office for National Statistics
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TILL DEATH DO US PART OUR ASSETS
By Rhoderick McGrigor
Here are two important and related facts for co-habiting couples: you mean no less to each other just because you are unmarried*, and there is no such thing as a ‘common law’ husband or wife. Sadly it is often when they are grieving the loss of a partner that co-habitees discover the second fact; that and related fact number three: they have no legal right to inherit any of their partner’s own property or assets. So it is essential for people living together to think about what happens to their assets on their death, and how to provide for their partner. There are certain steps that can be taken aside from writing a Will. Some jointly held assets pass by survivorship to the co-owner; joint bank accounts are normally treated this way. However, jointly owned property may sometimes be held in defined shares so that each owner’s share will not automatically pass to the survivor. You should ask your solicitor to check this carefully to confirm either way. It is also possible for the proceeds of life policies and pension benefits to be nominated in favour of a partner, for example. But the correct beneficiary will only receive these proceeds if you have given formal written instructions to the life product or pension provider. You need to think carefully about that, take the right advice, and make sure you act on it.
Apart from certain joint or nominated assets, if you leave no Will the ‘intestacy rules’ will apply to everything else you own. Your assets will be divided among your relatives under a complex formula based on the size of your estate and surviving relatives. This can leave a surviving co-habitee with nothing. If you live together and die intestate: Your unmarried partner receives nothing. ■ Your wishes are ignored when distributing your assets. ■ Some relatives you actually dislike, or have never even met, may benefit. ■ You do not choose the ‘Administrator’ who will deal with your assets. ■ Your children will inherit automatically when they turn 18, which you might think is too young. ■ You have no control over the effects of Inheritance tax. ■
If you have not provided for your partner, you have left them a stark choice: to go without, or to go to Court to seek financial support out of your estate as a dependent. This could mean, for example, claiming against your own children for part of their inheritance. We strongly recommend that everyone has a Will, regardless of their marital status. Please contact a member of our Private Wealth Team for more information and they will be happy to discuss what you need. *Broadly, all forms of marriage and Civil Partnerships are treated equally under the law of succession of England and Wales, and for Inheritance Tax purposes. In this article we have used the words marriage, husband and wife for simplicity.
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THE REVIEW WINTER 2016
CHELSEA & MOURINHO V EVA CARNEIRO By David Ludlow
Remember when a visibly annoyed Jose Mourinho, now the Ex-Chelsea F.C. manager criticised Eva Carneiro, the Chelsea team doctor, for running on to the pitch to treat Eden Hazard? Mourinho later told the media that Carneiro and the team physio Jon Fearn were “impulsive and naive” so to treat Hazard. Shortly afterwards Carneiro was effectively demoted and never reappeared on the Chelsea bench. On 22nd September Chelsea announced that she had left the Club. Not surprisingly, Carneiro has brought Employment Tribunal claims, reportedly for constructive dismissal and breach of contract plus a “separate but connected legal claim” for discrimination. The constructive dismissal and breach of contract claims are fundamentally similar, being claims that Chelsea committed so serious a breach that it destroyed the employment relationship.
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The employee must terminate the contract in response to that breach by walking out without notice, or give notice in circumstances in which she could have walked out.
...the unfairness opens the door to an award of compensation for loss of earnings of up to £78,335 and reinstatement. If Carneiro walked out then she will be entitled to her notice money, but the media reports of a claim of ‘constructive dismissal’ is almost certainly a claim of “constructive unfair dismissal”. In the Employment Tribunal the breach of contract notice money claim is capped at £25,000, but the unfairness opens the door to an award of compensation for loss of earnings of up to £78,335 and reinstatement. Carneiro will likely claim that through
DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
Mourinho’s conduct Chelsea F.C. breached the implied term that an employer will not “conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between it and the employee without reasonable and proper cause”. From the TV pictures and media reports a Tribunal might be persuaded that by Mourinho’s conduct at the Club breached this key term. If Carneiro can show that the principal reason for her dismissal was that she “carried out activities in connection with preventing or reducing risks to health and safety at work…”, the dismissal will be “automatically” unfair on one of the Health and Safety grounds in the Employment Rights Act 1996. Even so, there are no obvious potentially fair grounds for dismissal, such as misconduct, disobedience or incompetent. The likelihood therefore is that Carneiro will win her unfair dismissal claim one way or the other.
Rumours abound about the sex discrimination claim, likely to be based on an allegation by Carneiro that she was treated in the way she was because she is a woman. Would Mourinho and, vicariously therefore, the Club have treated a male Doctor in the same way? Was she treated less favourably than the male physio who also ran onto the pitch? Does she allege that by describing her conduct as “impulsive and naive” Mourinho engaged in unwanted conduct related to her sex which had the purpose or effect of violating her dignity and creating a humiliating environment? All of this will go before the Employment Tribunal later this year. Intriguing for a Chelsea supporter, never mind for one who is also an Employment lawyer!
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THE REVIEW WINTER 2016
12 million people from the UK will take a winter holiday during the coming months. Due to the fast-paced nature of the sport, there is a high level of risk involved, with injuries ranging from minor sprains and bruising to more serious injuries including head trauma, whiplash, and fractured and broken bones.
Why wear a helmet on the piste? According to new research from the FCO, of those British nationals that go on winter sports holidays 70% admitted they do not always wear a helmet when skiing or snowboarding.
70%
2 out of 3 skiers and snowboarders who had been in a collision but hadn’t suffered an injury said that they always wore helmets.
74%
74% of head injuries occurred when s kiers hit their head on the snow, 10% when they collided with each other and 13% when they collided with fixed objects.
59%
A 2011 British Medical Journal study from the University of Innsbruck suggested helmet use reduced head injuries by 35% in adults and 59% in children under 13.
Tips to stay safe on the slopes Take out insurance - and check what it covers. It might not cover off piste skiing unless you are with a qualified guide. Have a check-up before you ski - one of the major causes of hospitalisation and death on the slopes is heart attacks. Don’t attempt slopes you’re not experienced or fit enough to tackle. 10
Don’t drink and ski. Alcohol can affect you f aster at high altitudes and dangerously l imits your awareness of risk and cold. Most skiing injuries are caused by collisions with other skiers watch your speed and distance. Cont...
DYNAMIC LEGAL SUPPORT FOR SUCCESSFUL INDIVIDUALS, BUSINESSES, SCHOOLS & CHARITIES
If you are going out on a glacier, you must wear a harness. If you fall into a crevasse, this will help the rescue team get you out.
If going off piste carry a shovel, a probe and a transceiver in case of an avalanche. Also remember that you need proper training on how to use a transceiver.
Costs incurred through injury Getting back to the UK from a ski accident means a special flight costing up to £4,000 from Europe and £8,000 from the US and Canada.
£4k
£15k
The average cost of treating a broken leg in Europe for example is £1,100 and a whopping £9,000 in the USA.
£9k
£2.5k
A fall resulting in a broken hip, treatment in a Spanish hospital with return flights cost £15,000.
The cost of a helicopter rescue from the pistes to hospital is likely to cost £2,500 in Europe.
Travel Insurance Research by ABTA reveals that 22% of people now travel abroad uninsured. Younger people are significantly more likely to risk travelling overseas without insurance as they believe the Government will pay for their treatment. Cost is the principal reason they don’t take out travel insurance.
Always check the terms and conditions of your policy. Common exclusions include going off-piste without a qualified guide, skiing under the influence of alcohol or ignoring local authority warnings. Also make sure your policy pays for both transport to hospital and back home to the UK.
Source: Association of British Travel Agents, University of Innsbruck and Foreign & Commonwealth Office.
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THE REVIEW WINTER 2016
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