Derek Francis

Call: 1985    

Practice Overview


Derek is a Barrister (called 1991) of Temple Tax Chambers, an Advocate (Scots Bar; called 1985) of Terra Firma Chambers, a Fellow of the Chartered Institute of Taxation ("CIOT") and a member of the Society of Trust & Estate Practitioners. He is recommended for tax and trust work in the latest editions of both Chambers UK and the Legal 500 directories. He has a practice in both English and Scots jurisdictions specialising in high-end trust and estate work and (typically) related tax. His practice has always extended beyond that context and he has advised and appeared in a range of tax matters, particularly in indirect tax cases. He is regularly instructed to draft and revise trust documentation for IHT planning purposes, including precedent styles for leading firms in that field. He is a member of the Editorial Board of Foster's Inheritance Tax.

A substantial part of Derek’s practice is advisory. Within the year 2015/16 it has included advising trustees of (c.) £19M largely landed estate in relation to possible consensual or judicial variation with a view to postponing absolute entitlement of a person enjoying a pre-22nd March 2006 interest in possession in reliance on the Wyndham v Egremont line of authority in the Chancery Division: whether this would trigger IHT, CGT or other liabilities. Advising re level (50%) of agricultural property relief on pre-31st August agricultural tenancies and whether/ how 100% relief might be achieved together with miscellaneous other incidental issues arising. The identity of the client is confidential.

 

Again, in 2015/16, he has advised one of the largest London private client firms in relation to professional negligence and quantum issues concerning a former partner’s negligent failure to advise that timeous steps be taken to restructure a pre-5th April 2006 Accumulation and Maintenance settlement.

 

Derek's tax cases include appearing for HMRC in Butlers Ship Stores Ltd v HMRC [2012] UKFTT 371 (TC), a ground-breaking case on the application of EU principles of proportionality and legal certainty deriving from VAT cases in an Excise as compared to VAT context. He also appeared in Highland Council v Revenue & Customs Commissioners before the Value Added Tax & Duties Tribunal. Derek was for two years a part-time tutor in Taxation in the University of Edinburgh. Trust and executry cases include Turner v Turner [2012] CSOH 41; 2012 S.L.T. 877; 2012 S.C.L.R. 329 - the leading Scots case on ademption of a special legacy by a continuing attorney's sale of the specially legated thing after the principal's incapacity.

 

He has drafted and moved numerous public and private trust variations and acted in many others. Recent examples include Allan Glen's School Club Trusts 2012, which involved hiving off from a public trust with otherwise charitable purposes - and a massive potential CGT liability on assets - a private (members’ club) element which prevented the trusts from being exclusively charitable for tax purposes. James Donald’s Accumulation and Maintenance Trust 18th December 2014 is a further recent example. It concerned an old pre-Finance Act 2006 Accumulation and Maintenance Trust and an application for approval of an Arrangement varying the trust by postponing for thirty years the date upon which beneficiaries, one of whom enjoyed a pre-2006 interest in possession, the other Ch. III relevant property, became absolutely entitled. There was at the time a serious issue whether such variation triggers either an inheritance tax (“IHT”) charge under s. 52(1) of the IHTA 1984 or a deemed disposal for CGT purposes (TCGA 1992, s.71). This involved extensive research and pre-application advice with settled assets c. £3M. The matter was fully argued. The live issue in the case has been overtaken by the accord reached between HMRC and the ICAEW Tax Faculty which suggests that such planning, properly executed, works.

 

In 2014 in Pattinson v Kelly & Others; The Strath Discretionary Trust Derek acted and appeared in construction/ rectification proceedings relating to settlor-interested discretionary trusts with assets exceeding £2M, and in relation to a botched resolution aimed at excluding settlor and spouse from the discretionary class through partial release of power of appointment. There were very substantial IHT and CGT implications. The case was brought in the Commercial Court and involved important issues as to competency. Derek advised upon and settled a professional negligence claim against the solicitors responsible. The case culminated in a hearing on affidavit evidence with lengthy submissions in the rectification proceedings focusing on  whether subjective, unimparted, convergent yet unilateral intention was sufficient in circumstances – as AMP v Barker suggests: it was.

 

In 2014 he was instructed to advise and direct the evidence and submission made through HMRC’s CGT clearance facility in relation to an anticipated dealing in land owned by an English company (PEL) which was a joint venture special purpose vehicle formed to assemble a development site from land acquisitions. Its shares were intended to be held equally by two corporate participators but left registered to PEL. The venturers wanted each to sell their respective interests. For PEL to have sold alone would have had disastrous CGT consequences. Averting these involved the establishment of bare/ bare constructive trust at English and Scots law by marshalling evidence, Opinions on both laws and HMRC extra-statutory clearance procedure, plus holding out the prospect of register rectification proceedings in the High Court. The landed interests were worth some £7M and pregnant with substantial gain. The identity of the client is confidential.

 

He was instructed by Herbert Smith Freehills along with leading company counsel in relation to the use and consequences of the use of a Scottish private purpose or charitable trust with other vehicles to defray prospective liabilities so distant that an English trust would have been perpetuitous. The sums involved ran into billions. The identity of the client is confidential.

 

He has acted in a wide spectrum of trust/fiduciary litigation; petitions for removal/appointment of trustees, actions of account, and petitions for directions.

 

He has appeared in trust and estate disputes without a tax content and still does so occasionally. Macdonald v Cowie (Exrx. of Hazel Moir dcsd) [2015] CSOH 101 was a case which went to a four day  witness hearing before Lord Tyre relating to the question whether an informal writing made by a deceased was a deed of gift of her house to her grandson, the pursuer (claimant) or a mere expression of a wish. He acted for the defending executrix and was successful in having the writing recognised as a mere expression of a wish. It is the first case in Scotland in which the observations of Lord Neuberger PSC in Marley v Rawlings which suggests that the Investors Compensation Scheme v West Bromwich Building Society line of authority whereby evidence of the admissible background is liberally admitted as an aid to construction applies to testamentary and trust instruments. Although it is at a slight tangent from his usual tax, trust and executry work it is mentioned because it was interesting and contentious.

 

Derek has advised and appeared in company matters arising out of unfairly prejudicial conduct, including Jesner v Jarrad Properties Ltd 1993 SC 34, just and equitable (and other) winding-up, wrongful trading and misfeasance applications and in several pensions matters, including litigation relating to surpluses, equalisation and mis-exercise of fiduciary powers. He is experienced in dealing with share valuation evidence.

 

Derek chairs the Edinburgh Tax Network (‘ETN’), a cross-disciplinary CIOT, ICAS, ICAEW, STEP and TrustBar sponsored CPD talk organiser for the tax profession. As well as a regular programme of events in Edinburgh, through ETN he has promoted events at the Inner Temple – in February 2016 at which the Rt. Hon. Lord Reed JSC spoke on domestic and European anti-avoidance principles with particular focus on UBS, Deutsche Bank and Pendragon principles and in February 2017, when the Rt. Hon. Lord Drummond Young will speak on Murray Group Holdings v HMRC (now on appeal to the Supreme Court), in which he gave the leading judgment.

 

His personal interests and hobbies include French literature, cycling and hill walking. He speaks good French and bad Italian.

 

Publications

Member of the Editorial Board of Foster's Inheritance Tax.

“Voyage of Discovery”, Taxation, 9th December 2015

“Personal Injury Trusts – the PITs?” Part 1, S.L.T. 2011, 15, 89-92; Part 2 S.L.T. 2011, 16, 95-101.

“The Bonfire of the Charities – winding-up unregistered entities” S.L.T. 2011, 12, 63-71 Insolv. Int. 2011, 24(3), 38-44, with Roger Laville of Addleshaw Goddard’s City Office corporate fraud team. He appeared in such a winding-up in 2009/10; Royal Aberdeen Workshop for the Blind and Disabled and in the Glasgow Fishermen’s Company in the 1990s.

“Hastings-Bass and his Scottish Friends” S.L.T. 2008, 24, 161-165

 

Talks and Papers

Derek has spoken on tax subjects at the Scottish and English national conferences of the Chartered Institute of Taxation. In 2014 he and Andy Finch of HMRC Specialist Investigations spoke on Contractors’ Off-shore Loan Schemes and Discovery Assessments. The talk was also given to various CIOT branches in England and Scotland.

Derek  is a regular speaker and chairman at tax and trust conferences in London and Edinburgh organised by commercial promoters (Informa/ IBC, MBL, Longmark, Solicitors Group and CCPD) and the profession.

Derek is a Barrister (called 1991) of Temple Tax Chambers, an Advocate (Scots Bar; called 1985) of Terra Firma Chambers, a Fellow of the Chartered Institute of Taxation ("CIOT") and a member of the Society of Trust & Estate Practitioners. He is recommended for tax and trust work in the latest editions of both Chambers UK and the Legal 500 directories. He has a practice in both English and Scots jurisdictions specialising in high-end trust and estate work and (typically) related tax. His practice has always extended beyond that context and he has advised and appeared in a range of tax matters, particularly in indirect tax cases. He is regularly instructed to draft and revise trust documentation for IHT planning purposes, including precedent styles for leading firms in that field. He is a member of the Editorial Board of Foster's Inheritance Tax.