Routier and Another v Revenue and Customs: SC 16 Oct 2019

A Jersey Charity created under a will of a Jersey resident was transfer to the UK, and reregistered with the UK Charity Commission. The Revenue sought to apply Inheritance Tax.
Held: Jersey was to be considered a third country for the purpose of a transfer of capital from the United Kingdom. The restriction of relief from inheritance tax to trusts governed by the law of a part of the United Kingdom is not supportable under EU law. Article 56 applies directly, must have effect in priority to inconsistent national law, whether judicial or legislative in origin.
Held: As the EU rules on free movement of capital do not apply in Jersey, Jersey is to be considered a third country for the purpose of a transfer of capital from the United Kingdom. Capital has moved from a member state where article 56 applies to a territory where it does not and that cannot be considered a purely internal situation. Accordingly, we would decline to make a preliminary reference on this point to the CJEU.
We conclude that article 56 EC applied to Mrs Coulter’s gift of assets in the United Kingdom to trustees in Jersey, that the refusal of relief from inheritance tax on that gift under section 23 of the Inheritance Tax Act was in breach of article 56, and that the appeal should therefore be allowed.


Lady Hale (President), Lord Reed (Deputy President), Lord Carnwath, Lord Hodge, Lord Lloyd-Jones


[2019] UKSC 43, [2019] STI 1722, [2019] WLR(D) 588, [2019] PTSR 1924, [2019] 3 WLR 757, [2019] STC 2182, UKSC 2017/0190


Bailii, Summary, WLRD, SC, SC Summary, SC Summary Video, SC 2019 Apr 02 am Video, SC 2019 Apr pm Video, SC 2019 Apr 03 am Video, SC 2019 Apr 03 pm Video


Inheritance Tax Act 1984 23


England and Wales


CitedJersey Produce Marketing Organisation (New Accessions) ECJ 8-Nov-2005
Europa Legislation on the export of potatoes from Jersey to the United Kingdom – 1972 Act of Accession – Protocol No 3 on the Channel Islands and the Isle of Man – Regulation No 706/73 – Articles 23 EC, 25 EC and . .
At ChDRoutier and Another v Revenue and Customs ChD 18-Sep-2014
Executors appealed against rejection of their claim that a gift in the will qualified for relief against Inheritance Tax as being a charitable gift. The Trusts concerned assets in Jersey.
Held: The appeal failed: ‘The expression ‘held on trust . .
At CA (2)Routier and Another v Revenue and Customs CA 17-Oct-2017
Inheritance tax, gifts to charities and freedom of capital . .
At CA (1)Routier and Another v Revenue and Customs CA 16-Sep-2016
Executors appealed against a decision that a residual gift in a will was not charitable and that it was therefore subject to Inheritance Tax arguing that the section if construed in this way was an unlawful restriction on the free movement of . .
CitedRoque v The Lieutenant Governor of Jersey ECJ 16-Jul-1998
(Judgment) Free movement of persons – Act of Accession 1972 – Protocol No 3 concerning the Channel Islands and the Isle of Man – Jersey
Article 4 of Protocol 3 to the Act of Accession did not prohibit a difference of treatment resulting from . .
CitedBarclay and Another, Regina (on The Application of) v Secretary of State for Justice and Others SC 22-Oct-2014
Constitutional Status of Chanel Islands considered
The Court was asked as to the role, if any, of the courts of England and Wales (including the Supreme Court) in the legislative process of one of the Channel Islands. It raised fundamental questions about the constitutional relationship between the . .
Citedvan der Kooy v Staatssecretaris van Financien ECJ 28-Jan-1999
Judgment – Part Four of the EC Treaty -? Article 227 of the EC Treaty ? Article 7(1)(a) of Sixth Directive 77/388/EEC ? Goods in free circulation in overseas countries and territories
Under the special arrangements applicable to the OCTs, . .
DeterminativePrunus (Free Movement Of Capital) ECJ 5-May-2011
Direct taxation – Free movement of capital – Article 64 TFEU – Legal persons established in a non-Member State – Ownership of immovable property located in a Member State – Tax on the market value of that property – Refusal of exemption – Assessment . .
CitedCommission v United Kingdom ECJ 23-Sep-2003
(Judgment) Failure of a Member State to fulfil its obligations – Failure to implement, in respect of Gibraltar, Directives 67/548/EEC and 87/18/EEC (concerning dangerous chemical substances); 93/12/EEC (concerning liquid fuels); 79/113/EEC, . .
CitedDepartment of Health and Social Security v Barr and Montrose Holdings (Judgment) ECJ 3-Jul-1991
Europa It follows from Article 1(3) of the Treaty of Accession 1972 in conjunction with Article 158 of the Act of Accession that the jurisdiction in preliminary ruling proceedings conferred on the Court by . .
CitedX BV v Staatssecretaris van Financien ECJ 5-Jun-2014
(Judgment) Free movement of capital – Restrictions – Payment of dividends from a Member State to an overseas territory of the same State – Scope of European Union law – Special European Union-OCTs arrangements . .
CitedThe Gibraltar Betting and Gaming Association v Revenue and Customs Commissioners and another (Government of Gibraltar intervening) ECJ 13-Jun-2017
ECJ Status of Gibraltar – Freedom To Provide Services – Purely Internal Situation – Inadmissibility : Judgment . .
CitedCommission v United Kingdom ECJ 21-Jul-2005
Europa Failure of a Member State to fulfil obligations – Directive 77/799/EEC – Mutual assistance by the competent authorities – Fields of VAT and excise duties – Partial transposition- Territory of Gibraltar. . .
CitedSpain v United Kingdom ECJ 12-Sep-2006
ECJ Law Governing – The Institutions – European Parliament – Elections – Right to vote – Commonwealth citizens residing in Gibraltar and not having citizenship of the Union. . .
CitedCamille and Henry Dreyfus Foundation Inc v Inland Revenue Commissioners HL 1956
The company was a foreign corporation constituted according to the laws of the state of New York for objects which were exclusively charitable according to the law of the United Kingdom.
Held: The term ‘charity’ does not include an institution . .
Lists of cited by and citing cases may be incomplete.

Inheritance Tax, Charity, European, Constitutional

Updated: 21 April 2022; Ref: scu.642829