Hood v HM Revenue and Customs: CA 30 Oct 2018

The court was asked: ‘ whether a reversionary long sub-lease of a valuable London residential property, granted on favourable terms by the taxpayer to her three sons in 1997, was ‘property subject to a reservation’ within the meaning of section 102 of the Finance Act 1986 (‘FA 1986’) when she died in 2008, as it happens some four years before the sub-lease would have fallen into possession. If the sub-lease was property subject to a reservation in the taxpayer’s estate, it formed part of her estate chargeable to inheritance tax (‘IHT’) on her death. If, on the other hand, the sub-lease was not property subject to a reservation in her estate, it escaped any charge to IHT on her death, because (a) it was not deemed by section 102 to remain part of her estate immediately before her death, and (b) the original grant of the sub-lease was a potentially exempt transfer (‘PET’) which she had survived by more than seven years, and which consequently became an exempt transfer.’
[2018] EWCA Civ 2405
England and Wales

Updated: 20 January 2021; Ref: scu.628683