If a land pooling trust was set up (Bare Trust) which has a retention period which states that at the end of the retention period the Land in the trust is to be transferred to the beneficiaries am I correct in thinking that if all the beneficiaries who of full age and capacity consent then the retention period can be extended.
Can someone please give me some advice on this. Thanks.
Yes, - it’s an application of Saunders v Vautier
The pooling of land (or other assets) within a bare trust is designed to rely on s60 (and so s68) TCGA 1992 and create a trust, with often very desirable long-form provisions for management by the trustees and rights of the beneficiaries inter se.
You are right to focus on any changes proposed to this regime. Just as the original terms of the trust must be carefully scrutinised to avoid the trust property becoming “settled property” so must any proposed change to those terms. If this trust is not currently settled property I doubt that any extension to its agreed duration would make it so or, equally important, constitute a disposal of the land by its beneficial owners or any of them. The latter would depend on the trust deed and it is always risky to answer such a query without sight of it.
The history of the two sections is not edifying. When CGT was introduced in FA 1965 HMG, in its wisdom or more likely technical ignorance, failed to elaborate on key aspects of CGT and trusts, notably the meaning of “absolutely entitled”. HMRC then trotted numerous cases through the courts to find out— at the expense of trust funds/taxpayers, a wholly unnecessary saga. I was involved at the start of this pantomime as part of the taxpayer’s team in Booth v Ellard which settled the principle that land could be, and in the instant case was, transferred into a trust without thereby becoming settled property.
HMRC’s repentance for their part in this now resides in a useful statement of their practice in CG34300 and following https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg34300.
But still everything depends on the drafting of the trust and variations present a key battleground as to whether they do or do not effect a disposal.
The framers of the TRS legislation, whose ignorance is equally self-evident, of course require bare trusts to be registered unless the trustees and beneficiaries are absolutely identical. They will almost certainly not be in a land pooling trust.
Jack Harper
Many thanks for your response. The trustees are also the beneficiaries but there are 2 other beneficiaries.
What I need to know is whether an end date can be extended by the agreement of all the beneficiaries or whether the land in the bare trust will need to be transferred to the beneficiaries as per the trust deed and then a new LPT be set up to mirror the original one with the only difference being a later end date.
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This looks to me like seeking definitive legal advice and, I suggest, should be obtained via a formal instruction rather than through this Forum (where no one can be held to account for what they say).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
I had hoped I was reponding to a fellow practitioner. If not I hereby disavow my answers on the basis I have not seen the trust deed and do not know even if it has been professionally drafted.
Jack Harper
Without sight of the trust deed I cannot give a definitive answer. As Andrew says, providing all beneficiaries are adults with capacity Saunders v Vautier should allow them to direct the trustees what to do what they wish with what is their own property. But it is not that simple as they have agreed among themselves to explicit terms and conditions of the trust and it seems likely that any one of them could veto a change. If one of the terms is that the trust has a finite duration any one can probably insist on it lasting to the end of the period and all of them can almost certainly agree to extend it. Whether a majority can extend depends on the trust terms, as does what these say about the right of one or more to terminate early.
It sounds like the purpose of the trust is still alive and that an extension is much more convenient than a transfer out and retransfer. It also sounds as if the issue of an extension may not be covered specifically in the terms. I would go so far as to say that if that is the case all the beneficiaries can agree to an extension just as they could have originally agreed to a longer period. But all must agree unless the terms provide otherwise
It is hard to see how a mere extension would cause a CGT disposal. The extraction of assets and transfer to a new trust raises the issue of a CGT disposal, although provided each receives back what he originally put in that will not occur. Sometimes that complete symmetry is not possible but whatever has been done to prevent it on the ground has not caused a disposal because it has not altered the beneficial entitlements to the whole. And it will all come out in the wash later when the entirety is disposed of and proceeds shared pro rata. And if no disposal of the whole occurs ss 248A-C of TCGA 1992 may assist on a transfer back out. But such a process seems unnecessary and to best be avoided.
Jack Harper
Paul
I totally agree with you and whilst I’m not against advice/suggestions being provided in general terms to non professionals and professionals it seems to me that it would be helpful if members knew in what capacity questions are being asked and advice/information is being sought/provided.
At the risk of sticking my neck out, perhaps a requirement that everyone using the forum includes their full name and capacity e.g. personal, retired/previous STEP member, XYZ solicitors/accountants etc they are posting would be helpful.
It would be interesting to know what the thoughts are on this idea of Forum Members and if favourable, in due course the Forum Moderators.
Andrew Mortimer
Previous STEP member, now retired
I do not really know what non-professionals can possibly expect to get out of this Forum. I used to tell my clients that the only tax advice I would give over the telephone was that the basic rate of income tax was 20%. A great mentor of my youngest days was Dr FA Mann who used to write to new clients only as follows “Dear Client, as you are almost certainly non-domiciled, you do not need to pay any UK tax”, which then reeled them in. Many of my clients were much more intelligent then I but as to law even for them a little knowledge was a dangerous thing.
Thanks for all the advice. I am a practicing Chartered Accountant who was just looking for some advice in an area that I only have a basic knowledge in. Apologies if I offended anyone or if anyone felt coerced into giving advice. We have asked Councel fir advice on this matter and it was Councel who drafted the original trust deed. I was merely asking on the forum to see what everyone’s thoughts were on the issue. My thoughts are that as long as all the beneficiaries were in agreement then an extension would be fine. Touchy lot, you solicitors 
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Many thanks for you thoughts Jack
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Andrew
I agree completely with you and with what Paul Saunders said.
When I post on the Forum, I always “sign off” as Cliona O’Tuama, Solicitor, intending that those reading my post will be aware of the capacity in which I posted. However, I saw on my recent posts that the word “Solicitor” was omitted from my signature.
I will sign off here as Cliona O’Tuama Solicitor also and wait to see how it appears in the post.
Cliona O’Tuama
Solicitor