AML: HMRC flexes enforcement muscle to the tune of £7.8 million
The recent divorce cases of Sharland and Gohil, which were decided in the Supreme Court in London in October 2015, demonstrate the significant differences in financial disclosure powers between England and France.
While marriage and the accompanying rights are now equal both in England and France – and for both same and opposite sex couples, a number of differences still exist relating to rights on civil partnership and cohabitation. Reform is possible on the agenda in the UK, but whatever the outcome of the EU referendum in 100 days’ time, it is more than likely any change in England will follow a Scottish model rather than that of our EU partner across the channel. This blog explores some of the key differences in the English and French approaches.
Cohabitants’ rights still weak in England and Wales
The failure of the judicial review by Rebecca Steinfeld and Charles Keidan recently throws into perspective the various rights available to married and particularly unmarried partners in England and Wales and its neighbouring jurisdictions like France or Scotland. The couple made a High Court claim to review the refusal in England and Wales to make civil partnership, originally introduced ten years ago for same sex couples, available to heterosexual couples. Civil partnership confers on those entering it exactly the same rights and obligations as marriage but without the label (and some would argue without the cultural baggage) of marriage. So, there are inheritance tax benefits, minor tax perks, and obligations on separation which are equal to those of divorce.
Same sex marriage (with the full label “marriage”) was introduced in 2014 in the jurisdictions of England and Wales and also in France. It is available to same sex couples, although according to statistics, only few will opt for what many have perceived as a ‘second class marriage’ (albeit marriage by another name) of civil partnership.
What is available for unmarried couples?
The French have offered state recognised cohabitation since 1999 - a regime otherwise known as the PACS (Pacte Civile de Solidarité). It does not pretend to be an equivalent of marriage. It was intended for both same-sex and heterosexual couples. It is state registered cohabitation which imposes a choice of property regimes on the couple. These govern how the couple will hold property during the relationship and on any relationship breakdown. There are also substantial tax and inheritance advantages. Importantly there is no right to receive maintenance if the couple split up. It is distinct and different from marriage.
The England and Wales picture is much simpler for cohabitants, and less stable for the financially weaker party. There are no legal rights available for the financially weaker party. The parties can agree a contractually binding “cohabitation agreement”, which would govern financial rights on breakdown. These agreements remain extremely rare although they are sometimes used amongst the very wealthy.
Perhaps the secular state in France, with a disestablished Church, meant that legislators felt freer to introduce rights nearly 20 years ago for unmarried couples.
In England and Wales, the political fact is that the government has no appetite to legislate for the rights of cohabitants. Having said that, a Private Members Bill introduced by Tim Loughton Conservative MP is currently going through Parliament, which would offer Civil Partnership to unmarried couples. This would put heterosexual couples in the same position of having marriage rights without the label of “marriage”. It would be marriage “light” rather than a PACS.
While it would offer state recognition of a relationship akin to marriage, it could be fairly politically and socially controversial here. It would also offer even more powerful rights and obligations than the PACS in France.
Although closer to marriage than the PACS, it seems likely any new rights for heterosexual couples would be extremely popular.
In France, the number of couples who enter the PACS and marriage each year are almost equal at around 250,000 couples each. The French experience shows that there is an appetite for a state-recognised relationship, which does not carry the expectations and history of the institution of marriage.
The position of Scotland
It is worth mentioning Scotland since in 2006, the Scots brought in the right for unmarried couples to make financial claims arising out of an unmarried relationship where a relationship had generated a financial disadvantage.
This is different from the position in England (where there are no rights of any kind arising out living with someone) and different from France where the rights are created and fixed by the marital regime from the time the PACS is created.
Cross border recognition
The French PACS has a very different legal history and context today. The law of England and Wales which gave recognition to civil partnerships (for same sex couples) prohibits the recognition of any foreign law which gives status and rights to heterosexual couples outside marriage. In other words, foreign couples who may have a PACS and later move to England and Wales will not be better off here compared with English unmarried heterosexual couples, who have no rights on living together.
It is likely that English law will be reformed at some point as the concern at the lack of cohabitants’ rights is growing. However, the new legislation is not expected to resemble the PACS but more likely the Scottish system, which gives unmarried couples rights (akin to marriage or similar) for relationship generated economic disadvantages. Until then, unmarried couples living together at the moment in England and Wales can put themselves in a position of severe financial risk, particularly if they make career sacrifices and have children.
For any further questions concerning Anglo-French divorce or separation issues please contact a member of our family team.
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