Barclays Bank Trust Company Ltd v Revenue and Customs: CA 14 Jul 2011

Parents had each left a share of their estate to the bank on trusts for their disabled son. The revenue said that the gifts were caught by and taxable by virtue of sections 5, 49 and 89 of the 1984 Act, the residuary estates of both parents forming part of the son’s estate because section 89 required the son to be treated as if he had had an interest in possession in each of them.
Held: The detailed structure of the clauses created an interest for the son, and income accumulated could only be applied for the son and not, by virtue of the limitations and the circumstances, in favour of his children. Also, ‘the time at which the conditions for the application of section 89 must be satisfied is ‘when the property was transferred into the settlement’. At that time the trusts on which the property was held did ‘secure’ that not less than half the settled property applied during his life was applied for the benefit of Edwin. The fact that at some later time Edwin disposed of his interest so that thereafter property could not be applied for his benefit is nothing to the point.’ As such the bank’s appeal failed.

Sir Andrew Morritt Ch,
[2011] EWCA Civ 810, [2011] NPC 75, [2011] WTLR 1489, [2011] BTC 375
Inheritance Tax Act 1984 89, Trustee Act 1925 32
England and Wales
CitedRe Halstead’s Will Trusts ChD 1937
The term ‘benefit’ in a trust instrument is to be construed widely. To exercise a power of advancement by settling on an object of the power and his wife and children, property in which he has otherwise only a life interest was an ‘application’. . .
CitedIn Re Pilkington’s Will Trusts; Pilkington v Inland Revenue Commissioners HL 8-Oct-1962
The trustees proposed establishing a new trust in respect of the share of an estate to which an infant beneficiary had a contingent entitlement. A portion of the trust fund would be allocated to the new trust.
Held: This was a lawful exercise . .

Lists of cited by and citing cases may be incomplete.

Inheritance Tax, Trusts

Updated: 01 November 2021; Ref: scu.441817