Changes in the world of Probate

Some 40 years ago when the writer was newly qualified as a Solicitor, it was sometimes said that Probate work was easy because it never changed.  That was a slightly cruel and inaccurate remark coming as it did only a few years after the replacement of Estate Duty (sometimes called Death Duties) with Capital Transfer Tax (CTT).

CTT which was renamed Inheritance Tax (IHT) in 1986 was, or seemed to be, the first real attempt to seriously tax inherited wealth. Despite that and the famous quip of the then Labour Chancellor of the Exchequer that this was a tax to make the “Pips squeak”,  it still remained a tax only paid by very few and generated a minuscule amount of Revenue compared to all other taxes.  Not only that, the actually procedures for dealing with the tax were largely unchanged from the days of Estate Duty and in many ways remained largely unchanged for the next few decades.  However, successive governments of both colours did not let the grass grow under their feet for very long and CTT/IHT did make a difference. Inheritance Tax has become a tax that is feared and hated by many, it generates a significant amount of revenue for the government and the law has been constantly modified and refined to make it increasingly effective and difficult to legitimately avoid.

After years during which the procedures for dealing with the tax remained largely unchanged, the last couple of years have seen sudden changes.  It used to be that for most taxable estates an IHT return and any tax due were submitted to HMRC, within a couple of days HMRC would issue a provisional tax clearance which meant that it was possible to apply to the Probate Registry for a Grant of Probate and frequently that grant would be issued within two and a half weeks from the date when the IHT return had been submitted to HMRC. The procedure once Probate was granted was that HMRC would then examine the IHT return in detail and possibly seek specialist reports on certain parts of the return, which in turn might lead to negotiations or sometimes disputes over values.  Occasionally this could be a long drawn out procedure but in most cases it was not, also and quite importantly HMRC bothered to respond to correspondence and telephone calls!

The new HMRC procedure which has been gradually coming in over the last couple of years (incidentally without any consultation or public announcements) is that when an IHT return is received specialist reports are immediately sought.  As far as we are able to make out, large parts of the return are examined on a tick box basis and in cases when HMRC considers there is a risk (how this is assessed is not clear but generally it seems to be based on value) the case is referred to the ”Compliance Branch’.  If a matter is not referred to the compliance branch HMRC grants provisional clearance usually after between 4 and 6 weeks (in contrast to the old 3 days) and states that if nothing is heard from them within 12 weeks it is possible to assume definitive clearance, provided there are no changes to values which have to be notified to HMRC. This new procedure, while initially significantly slower than the old procedure, does for some people mean that final clearance can be obtained much more quickly than used to be the case.

If however it becomes necessary to report amendments to HMRC or if your case is referred to the Compliance Branch, it is a completely different and often highly unsatisfactory situation. Post appears to be ignored for months, phone calls sometimes but not always can help to break a log jam and mistakes seem to be rife.  Sadly this is a service, which is less than satisfactory and has not yet been improved by change.

While we are adapting to the new approach from HMRC, changes are also happening with the Probate Registries, who as part of the High Court deal with the issuing of Grants of Probate. 

As many people already know, there are the dramatic rises in Probate Court charges. These have yet to come into place but assuming they do we will see some estates paying as much as £6000 in Court fees in the place of the current fee of between £150 and £210. The government is aiming to make a significant profit with these fees and use them to subsidise other parts of the Ministry of Justice. Most observers consider that this is a disguised form of taxation and the rises are being opposed in a number of quarters.

What are the changes to probate applications?
Changes to fees happen periodically and some are more controversial than others, but most of the other changes at the probate Registry are far more dramatic and involve changes to procedures that go back almost unchanged for over 100 years.

Firstly, it is no longer necessary to swear an oath or to exhibit a Will to the Probate application. Instead of an oath, it is now necessary to make what is called a “Statement of Truth”. This is almost identical to the old Executors oath but it lacks to solemnity of having to swear and oath in front of an independent lawyer, and it is no longer necessary to exhibit and mark the Will as always used to happen with the Oath. The Statement of Truth does make it clear that anyone who makes such a statement knowing it is not true can be subject to criminal sanction. Many worry that this new procedure may make it easier for the unscrupulous to submit inaccurate or untruthful Probate applications and also that there is a risk that the wrong Will might be submitted to the Probate Court in those cases where someone may have made multiple Wills.

Secondly, the Grant of Probate itself is being changed. This used to be and has been for at least 100 years quite a grand looking statement of someone death, followed by details of who are the executors and the size of the estate and an official copy of the Will all of which have the court seal embossed on them, along with what used to be called “office copies” which were official copies bearing the embossed Court seal.  The new grant of probate is completely different because no official Grant of Probate with a copy Will is being issued. Instead, what is being issued is a document that is called a “Grant of Probate” but which it appears is in fact the equivalent of the old style office copy. Instead of being issues on high quality paper, this is now issued on what is normally quality printer paper, the wording shown is different to the old wording and seems to be slightly curiously complex. Instead of the embossed court seal there is instead a Hologram on each official copy of the grant. The lack of any officially issued copy of the Will is a matter of some concern to us and at present practitioners seem to be considering whether they purely rely upon keeping their own copies of the Will, which is what has been recommended by the Probate Registries, or if we should now as a matter of course order an official copy of the Will when lodging the probate application. This author believes that the latter is probably the way to go but also fears that the way in which the new grants of probate are being processed means that such a request would cause all sorts of problems!

The third and final change is that the MOJ are now planning to shut all or most of the Regional Probate Registries and to centralise the function into one office; apparently Birmingham is the likely location. It is not yet clear what will happen to the many people who currently make personal applications for probate and attend at a local probate registry to do this. The writer suspects that one of the reasons for the introduction of the Statement of Truth might be to facilitate the ending of individual appointments at the probate registry. Will this make it easier for the unscrupulous to obtain probate possibly fraudulently? There is also fear amongst the profession that the shutting of local probate registries will remove the element of competition that has for many years existed between the different registries competing to be the most efficient.

Is there a greater risk of Probate Fraud?
We are told that the drive for all these changes both at HMRC and at the Probate Registries has been to increase efficiency, however it takes very little to discover that actually the biggest driver is the desire of the government to save money. While none of us likes to see government squandering our money it is worrying to see these sorts of changes being introduced, in most cases with little or no consultation. At best, most of us fear that the whole probate process will become slower and there is greater risk of being left in limbo, where someone’s affairs have been frozen pending the grant of probate. At the worst many of us fear that some of these changes make it easier for the wrong people to obtain probate, quite possibly fraudulently, and that there is a greater risk of the wrong Will being accidentally submitted for Probate.

It is to be hoped that our worst fears will not come true. At Herrington Carmichael we will continue to aim to work as best we can with HMRC and the Probate Registry to offer a quick and efficient service seeking to always obtain the best deal for our clients. 

Charlotte Drury-Woods
Partner, Head of Private Wealth & Inheritance
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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