Trustees of a UK trust (individuals) hold UK property via a corporate nominee.
One of the trustees wishes to retire (pursuant to s39 TA 1925); there are at least two persons continuing to act as trustees.
The nominee agreement was entered into by the named individuals as trustees of the trust. The agreement contains no express language contemplating that the beneficial owner may be “the trustees for the time being” if different from the signatories.
Does a new nominee agreement need to be entered into by the continuing trustee in these circumstances?
I am inclined to say yes, but wondered if there is anything that would result in the trustees being treated as a single continuing body for the purposes of legal contracts (e.g. similar to the tax position)?
Definitely not. Your first instinct is the right one. The single continuing body concept is purely (sic) a (mostly convenient) invention of our betters (sic) who claim the inalienable constitutional right to afflict us with fiscal legislation but principally with CGT. Also income tax, although per TSEM3036 HMRC seem to think that ICTA1988 is still in force. In fact s.474(1) ITA 2007 now applies but, as my spouse might say, if they don’t know I’m not going to tell them.
IHT does not do it and the section, s.45, headed “Trustee”, is only there to define when a person who is not a trustee is one for IHT.
SDLT in FA 2003 Sch 16 does not do it either, although it does indulge in some weird necromancy, treating some trustees as acquiring both the legal and equitable interest (which is described as a “beneficial” interest) in land and some beneficiaries as having an equitable interest where the proper law of the trust is one of those rather silly foreign laws that does not recognise the true and enlightened concept of bifurcation, not least the law of Scotland. There is more heretical skulduggery in Sch4ZA (higher rates), which divides non-bare trusts into those with life or income interests and others: SDLTM09835.
Nomineeship is essentially governed by the (good old) law of contract, so hard to say what any given contract might or might not precisely provide. Of course, the nominee might hold the legal interest in an asset on trust for the trustees of a pukka settlement. While that is likely to be a bare trust it is unlikely to be plain vanilla since the otherwise absolute right of those trustees to call for a transfer to them of the legal title in the bare trust property may well be qualified by the terms of the contract.
I’d say that a completely pure nominee agreement, which simply states that the nominee holds the assets on trust for the trustees, may not need to be replaced as the trustees’ beneficial interest should vest in the continuing trustees as per s.40(2).
However, if there is anything further by way of contract, such as an indemnity, it would make sense to put a new one in place.
S.40(2) can only operate to vest in the new body of trustees the interest that was vested in the old body of trustees which is here, as Andrew points out, only the equitable interest. Subject to the nominee agreement, the nominee still holds the legal interest and is entitled to and should require sight of evidence of the valid change of trusteeship if he is asked to make a transfer by and to a person, or several including a person, he does not recognise as entitled to do so.