The soon to be introduced probate fee increases have been challenged by a parliamentary committee.
Published today in a report, the joint committee on statutory instruments stated that the Lord Chancellor could be overstepping her powers by bringing in fees which bear the hallmark of an estate tax. The also expressed doubt as to whether the proposals would be intra vires and that they require the attention of both the House of Lords and the House of Commons.
The Ministry of Justice confirmed earlier this year that the plans to increase probate fees so they rise in line with the value of an estate would go ahead. This could be as much as £20,000 for those inheriting estates worth £2 million or more. Predicted to total around £250 million per annum, the extra money will go towards funding the courts and tribunal service.
The report published today, however, highlights doubts regarding the proposals, stating: ‘The committee has a real doubt as to whether the lord chancellor may use a power to prescribe non-contentious probate fees for the purpose of funding services which executors do not seek to use.’
Made up of 12 members, the committee is appointed to consider statutory instruments which stem from exercising power granted by an act of parliament.
As well as appearing to bear the hallmarks of a tax on an estate, the committee also states that the charges are disproportionate to the services of the probate registry.
Supporting the introduction of the fees, the Ministry of Justice (MoJ) are relying on the enabling powers within S. 92 of the Courts Act 2003 and Section 180 of the Anti-Social Behaviour, Crime and Policing Act 2014.
The latter act sets out that prior to setting a fee, the Lord Chancellor must give consideration to the financial position of the courts. This includes any costs they have accumulated which are not being met by fee income and legal services competitiveness.
The Committee states that it brought up the issue of Lord Chancellor acting beyond her powers with the MoJ.
They responded by highlighting the 2014 act, stating that it illustrated ‘parliament’s clear intention that the lord chancellor may set certain fees above cost recovery levels in one part of the court and tribunal system in order to help maintain the efficient and effective operation of the rest of the system’.
However, the Committee disagreed. They doubted whether the 2014 act provides the Lord Chancellor with the power to implement charges of the ‘magnitude proposed by the draft order’.
Commenting on the report’s publication was Nigel Walker-Jennings. The LLM Barrister, In-House Counsel & Director at the Legal Services Guild (LSG) stated: “Currently, the Probate registry generates around £23 Million per year; this pays for the Probate service. The MoJ have clearly stated that the increase will generate revenue of around £250 Million – 10 times what it requires to run service.
“The blatant increase in income above what it costs to run the service cannot be justified as a fee; couple that with the new “fees” being linked to a person’s wealth and it is understandable how the committee has come to the conclusion it has.
“Also, the statement that 90% of fees will be below £1000 is incorrect. In 2013/14, the death statistics show that of the 258,000 deaths, there were over 66,000 deaths that would pay between £1000 and £20,000.
“This is just another example of the government allegedly giving in one hand and taking with the other; acting under the banner of fairness, when actually their decisions are simply commercially motivated.”
However, a spokesperson from the MoJ has stated there are currently no plans for the probate changes to be set aside.
“We will introduce a fairer system, meaning over half of estates pay nothing and over 90% pay less than £1,000. They will be considered in Parliament after Easter, and come into force as soon as possible.”
