The Wealth Finance Brief - March 2017
In this first edition of The Wealth Finance Brief in 2017, we cover a diverse range of topics.
We have updated our detailed briefing paper on Yacht Finance, which we hope serves as a useful guide to the structure and characteristics of these types of transactions, both from a borrower and lender perspective.
Being told of the existence of a freezing order in relation to a client's assets can cause panic – we provide guidance to help equip a lender faced with such a situation.
The recent case of Menelaou v Bank of Cyprus gives us an excuse to focus on unpaid vendor liens: what they are, the type of transaction on which they may arise, and how a lender can avoid being subordinate.
Alongside the raft of tax law changes to occur in 2017 which will impact loan deals (see "Key Dates to look out for in 2017" below), there are to be further reforms to the taxation of non-UK domicilaries. In the final article our tax team considers the proposed changes in relation to UK residential property owned by such non-UK domiciliaries.
Hannah Rowbotham, Editor
Key Dates to look out for in 2017
With elections in three major European countries, 2017 promises to be a year of even greater political awareness, and potentially upheaval. We also set out below the timetable and key dates around the announcement or implementation of new rules in the English legal world which will be of most interest to banks and other financial institutions.
Briefing Paper: Yacht Finance
The market for Yachts remains tough given volatile currency movements, the slowdown of growth in China, Brazil and other emerging markets, issues between Russia and its neighbours and instability in the Middle East. Hopefully as the USA gains economic strength, there will be an increase in buyers from this region to off-set the weak demand in Europe. In this briefing paper we set out in detail the key issues and features of a yacht financing transaction.
A Banker's Guide to Freezing Orders
In this article we take a detailed look at freezing orders. Of most concern to lenders will be the obligations that fall on them – as bankers to the respondent which is the subject of the freezing order – when dealing with the respondent's assets, for example in relation to drawings under a loan facility and permitting payments out of a frozen account.
Unpaid Vendor Liens
We consider below the circumstances in which a person may hold an "unpaid vendor lien", the effect of such a lien following the Supreme Court case of Menelaou v Bank of Cyprus UK Ltd  EWHC 2656, and what best practice should be going forward on transactions where such a lien may arise.
UK residential owned by non-domicilliaries; unexpected announcement of IHT charges for lenders and borrowers
The Government announced in the Summer Budget 2015 that from April 2017 non-UK domiciled individuals will no longer be able to shelter their UK residential property from inheritance tax ("IHT") by holding the property in an offshore structure. As part of a package of further reforms to the taxation of non-UK domiciliaries, the Government has proposed new IHT charges which may be very significant for lenders and borrowers. This article from our tax blog summarises such proposed charges.