Governance issues

In creating and running a charity, not only the format of the charity has to be considered but also how it is to be run. In other words, what governing procedures are there in place in order to determine what should and should not be done so far as members and trustees are concerned.

Charity constitution models

The constitution of a charity is fundamental to its running. It will and indeed, must set out the relationship between the trustees as between themselves as well as with the members. Equally it must also deal with the relationship between members as well as their rights in respect of the trustees' operation of the charity.

Matters can get confusing where the trustees are also the members and the potential for conflict is immense where there are members unless there are restrictions on their powers. Unless the procedures to deal with these issues are dealt with in the governing document there is a possibility that the charity will fail to succeed even though at the beginning that would seem the most unlikely scenario. With the Charity Commission unwilling to intervene save in the case

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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