The executors challenged the assessment to Inheritance tax on the estate. The commissioners claimed that a gift of property into a trust included a sufficient reservation of benefit to disallow it as an exempt transfer.
Held: The scheme was effective. The trust provided for the income to be paid to the settlor’s husband during his life, but after his death on discretionary trusts to a class of beneficiaries including the settlor for 80 years. The transfer into the trust was an exempt transfer, and although his interest was limited, it was treated as entitled to the whole under s49. The draughtsman did not equate a disposal by gift with a transfer of value, and the court could not do it for him.
Judges:
Lord Justice Brooke Mr Justice Nelson Lord Justice Carnwath
Citations:
[2003] EWCA Civ 668, Times 30-May-2003, Gazette 10-Jul-2003
Links:
Statutes:
Inheritance Tax Act 1984 18 49(1) 102, Finance Act 1986 100
Jurisdiction:
England and Wales
Citing:
Applied – Ingram and Another v Commissioners of Inland Revenue HL 10-Dec-1998
To protect her estate from Inheritance Tax, the deceased gave land to her solicitor, but then took back a lease. The solicitor then conveyed the land on freehold on to members of her family.
Held: The lease-back by the nominee was not void as . .
Cited – St Aubyn v Attorney General HL 12-Jul-1951
The donor exercised powers of appointment ‘to make some part of the settled property his own’, and it was ‘wholly irrelevant that by a contemporaneous or later transaction he surrenders his life interest in other parts of it’. The different parts of . .
Cited – Lang v Webb 1912
(High Court of Australia) In 1908 the deceased had transferred and conveyed a piece of land to each of her three sons; on the same date as, but subsequently to, the execution of the transfers and conveyances there had been executed by the deceased . .
Appeal from – Inland Revenue Commissioners v Eversden and Another ChD 10-Jul-2002
A settlor had created a discretionary trust in favour of her husband. The Commissioners sought to apply the reservation of benefit provisions.
Held: The settlor’s retained entitlement as a discretionary beneficiary did constitute a reservation . .
Cited – Commissioner for Stamp Duties of New South Wales v Perpetual Trust Company Ltd PC 1943
(Australia) The court considered reservation of benefit rules. Under the settlement the trustees were required to hold certain company shares, to apply the income for the maintenance of the settlor’s son during his minority, and to transfer the . .
Lists of cited by and citing cases may be incomplete.
Inheritance Tax
Updated: 07 June 2022; Ref: scu.182222