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Drafting a building contract/schedule of amendments—checklist

Drafting a building contract/schedule of amendments—checklist Once the procurement route and form of building contract has been selected (see Practice Note: Choosing the right procurement method—construction projects) the employer should consider the following matters and incorporate the appropriate drafting in the building contract particulars and schedule of amendments. This Checklist assumes that the parties are using a standard form of building contract, such as a JCT form, and that the employer is proposing the first draft including the completed contract particulars and a schedule of amendments, which amends the standard terms. This list is not exhaustive, however, and there may be other project specific matters/risks that need to be taken into account: Contractual matters • Carry out due diligence on the contractor The employer needs to carry out due diligence on the contractor at the outset to determine whether its financial position is acceptable. Confirm the contractor’s company number and name at Companies House. • Obtain consultants’ details Confirm the full details of the consultants engaged by the employer; some...

Option agreements—acting for the buyer—checklist

Option agreements—acting for the buyer—checklist Call or put option? In a 'call' option the buyer will have control in that it may call for a transfer of the property. A 'put' option gives the seller control in that it can require the buyer to take a transfer of the property and therefore the buyer should be especially vigilant in ensuring that the terms for the transfer (particularly those relating to valuation and, if appropriate, insurance) are as favourable as possible. Seller's charges If the property is already mortgaged at the date of grant of the option agreement, there is a risk that the mortgagee may overreach the option by exercising its power of sale. Therefore ensure that the mortgagee either: • joins into the agreement (this is rare in practice), or • provides written consent to the granting of the option In either case, the mortgagee should confirm that if the buyer exercises the option it will acquire the property free from the charge or, if the mortgagee...

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Step-in clauses—flowchart

Step-in clauses—flowchart This flowchart is an example of the step-in rights process that may be contained in a collateral warranty. The terms of any step-in rights contained in

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Professional indemnity insurance in construction projects

Professional indemnity insurance in construction projects This Practice Note looks at professional indemnity (PI) insurance in the context of construction projects—the requirement to hold insurance, the level and basis of cover and typical wording contained in clauses requiring PI insurance to be maintained. For a wider review of professional indemnity insurance, see Practice Note: Professional indemnity insurance—essentials. This Practice Note refers to a consultant’s obligations to maintain PI insurance, however main contractors and sub-contractors taking on design responsibility will also be required to maintain PI insurance and the principles referred to below also apply to those contractors. A contractor with no design responsibility may not consider it necessary to hold PI insurance, however, in the event that a contractor failed to follow the consultant’s designs, an employer may allege that the contractor made an ‘on-the-spot design decision’, which could trigger a PI policy. For more information, see Practice Note: Design liability in construction contracts—Responsibility for design under different procurement routes (in particular, the section titled ‘Traditional’). Requirement to...

Funding an employee benefit trust

Funding an employee benefit trust This Practice Note covers the following issues in relation to the funding of an employee benefit trust (EBT): • practical aspects of funding an EBT • financial assistance—the background • financial assistance—the current position • relevance of financial assistance to EBTs • financial assistance—exemptions • the employees’ shares scheme exemption • consequences of non-compliance of the financial assistance provisions • tax implications for close companies which fund EBTs, and • corporation tax relief in respect of EBT funding Practical aspects of funding an EBT When an EBT is first set up, it needs to be provided with initial financing, as a trust cannot exist without initial trust assets. It is common for a nominal amount, for example £100, to be settled on the trustee in order to establish the EBT (for further details, see Practice Note: Setting up an EBT). However, after the EBT has established, other funding can be provided. This may be by way of: • voluntary contribution • loan...

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Explanatory note for a client's Will—to spouse on flexible life interest trust with remainder on discretionary trust

Explanatory note for a client's Will—to spouse on flexible life interest trust with remainder on discretionary trust STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime. Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief. For information on these changes, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. [Your] Will—[name of testator]—explanatory note This explanatory note explains the main provisions of your Will. Please read this explanatory note and your Will carefully....

Copyright licence clause (collateral warranty)

Copyright licence 1 The copyri

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The trustees of a non-UK trust have been asked to make a loan to a UK-resident beneficiary so that the beneficiary can remortgage their home in the UK. The loan will be secured by a first legal charge on the property. The loan could be made directly by the trustees, or by an underlying company of the trust. Would this constitute a regulated activity for the trustee or the company so that it would need to be licensed by the Financial Conduct Authority?

The trustees of a non-UK trust have been asked to make a loan to a UK-resident beneficiary so that the beneficiary can remortgage their home in the UK. The loan will be secured by a first legal charge on the property. The loan could be made directly by the trustees, or by an underlying company of the trust. Would this constitute a regulated activity for the trustee or the company so that it would need to be licensed by the Financial Conduct Authority? The loan may be a regulated activity for the purposes of the Financial Services and Markets Act 2000 (FSMA 2000). This is because you state that the loan will be secured on the property by first legal mortgage. If the person making the loan is doing so 'by way of business', they must be authorised to do so under FSMA 2000. Otherwise, they will be committing a criminal offence. In its guidance, the FCA provides that whether or not a mortgage is

What test applies for determining whether someone is 'incapable of administering their property or managing their affairs' for the purposes of establishing whether a beneficiary suffering from a mental disorder would qualify as disabled for tax purposes?

What test applies for determining whether someone is 'incapable of administering their property or managing their affairs' for the purposes of establishing whether a beneficiary suffering from a mental disorder would qualify as disabled for tax purposes? This answer is limited to the definition of a disabled beneficiary for inheritance tax (IHT) and does not consider the definition or implications for taxation in relation to income tax or capital gains tax. It is also assumed that the question relates to the settlement into trust of funds for the disabled person. Following the changes brought about by the Finance Act 2006, most settlements created by a settlor during their lifetime are relevant property trusts for the purposes of IHT and certain trusts created by Will also fall into the relevant property regime. Therefore, for the most part, lifetime gifts into settlements are immediately chargeable transfers on which the settlor will be charged to IHT at the lifetime rate of 20% where the amount settled exceeds the settlor's...

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Private Client weekly highlights—17 April 2025

This week’s edition of Private Client highlights includes: (1) Changizi v Changizi, where a non-exempt beneficiary’s share of estate was liable for IHT under Re Ratcliffe; (2) Argyll and Bute Council v RF (by his litigation friend, the Official Solicitor), in which the Court of Protection refuses an application for recognition and enforcement of a Scottish Guardianship order; (3) Abbasi v Newcastle upon Tyne Hospitals NHS Foundation Trust; Haastrup v King’s College Hospital NHS Foundation Trust, in which the Supreme Court held that anonymity for clinicians in withdrawal of treatment cases involving children should normally be of limited duration; (4) Companies House launches a new voluntary identity verification service; (5) Armstrong v Bhattacharya, which highlights the importance of clear, contemporaneous documentary evidence and a consistent case in circumstances where a person wishes to demonstrate that ownership of a property differs to that which is recorded at HM Land Registry; (6) Tedford v Clarke, in which the court held that although a Will was badly drafted, it was not meaningless and...

Private Client weekly highlights—10 April 2025

This week’s edition of Private Client highlights includes: (1) HMRC publishes an updated IHT400 and new schedule IHT401a to record non long-term residence status of deceased; (2) Irwin Mitchell Trust Corporation Ltd v KS, an important decision which addresses the jurisdictional limits of the Court of Protection; (3) HMRC has confirmed that trustees must close and re-register trusts ceasing to be taxable under the Trust Registration Service; (4) HMRC publishes a new Residence and FIG Regime Manual and updates its Inheritance Tax, Trusts and Estates, and International manuals to reflect recent changes to the law on domicile; (5) HMRC publishes new directions for internationally mobile employees; and (6) 381 Southwark Park Road RTM Company Ltd v Click St Andrews Ltd, the first decision to award a building liability order under the Building Safety Act 2022 and which signals a major development in company law and the doctrine that different companies should generally be treated as different legal persons.