Smith and Others v Her Majesty’s Revenue and Customs: SCIT 18 Mar 2009

SCIT Inheritance tax – Death – liability for tax – building society account not notified prior to issue of Clearance – account part of deceased’s estate for inheritance tax purposes – estate distributed by executors before they realised that account part of taxable estate – nature of asset – whether settled property – persons liable for tax attributable to property in account – persons liable for tax attributable to other assets – Inheritance Tax Act 1984 sections 4,5,43(3),200,204 and 211

Powell J
[2009] UKVAT SPC00742, [2009] WTLR 691, [2009] STC (SCD) 386, [2009] STI 1102
Bailii
Inheritance Tax Act 1984
England and Wales

Inheritance Tax

Leading Case

Updated: 09 November 2021; Ref: scu.373756

Lau v Her Majesty’s Revenue and Customs: SCIT 18 Mar 2009

lau_hmrcSCIT

SCIT INHERITANCE TAX – DISCLAIMER OF BENEFIT – The Appellant was joint executor and residuary beneficiary of her late husband’s estate – The Appellant paid andpound;1 million to her son who had renounced a legacy of andpound;665,000 under the Will of his step father – The Appellant contended that the payment of andpound;1 million was unconnected with her son’s renunciation – the payment was made in fulfilment of an earlier promise to fund her son’s business ventures – evidence overwhelmingly demonstrated that the renunciation was made in return for payment of the andpound;1 million – renunciation no effect made for consideration in monies – Appeal dismissed – section 142(3) Inheritance Tax Act 1984.

Michael Tildesley
[2009] UKVAT SPC00740
Bailii

Inheritance Tax

Leading Case

Updated: 02 November 2021; Ref: scu.373755

Revenue and Customs v Representatives of Staveley (Deceased): UTTC 10 Jan 2017

Failure to take pension benefits – Inheritance Tax

UTTC INHERITANCE TAX – whether transfer of funds to a personal pension plan was a transfer of value – Inheritance Tax Act 1984, s 3(1) and s 10 – whether deceased’s omission to take lifetime pension benefits was to be treated as a disposition and transfer of value – s 3(3) IHTA

Barling J
[2017] UKUT 4 (TCC), [2017] STC 574, [2017] BTC 504
Bailii
Inheritance Tax Act 1984 3(3)
England and Wales
Citing:
Appeal fromParry and Others v Revenue and Customs FTTTx 7-May-2014
INHERITANCE TAX – transfer of funds to personal pension plan while diagnosed with terminal cancer – whether transfer of value – omission to take lifetime benefits – whether disposition and transfer of value – appeal allowed in part . .

Cited by:
Appeal from (UTTC)Revenue and Customs v Parry and Others CA 16-Oct-2018
Pension Accumulation was taxable
The court was asked whether the pension scheme transfer by the late Mrs R F Staveley, and her omission to take income benefits which were then payable, constituted, or are to be treated as constituting, for the purposes of Inheritance Tax 1984 . .
At UTTCRevenue and Customs v Parry and Others SC 19-Aug-2020
Whether the pension scheme transfer by the late Mrs Staveley, and her omission to take income benefits which were then payable, constituted, or are to be treated as constituting, for the purposes of the Inheritance Tax 1984 a ‘disposition’ which is . .

Lists of cited by and citing cases may be incomplete.

Inheritance Tax

Updated: 01 November 2021; Ref: scu.577810

Sussman v Revenue and Customs: FTTTx 29 Jul 2016

Whether gift with reservation

FTTTx Inheritance tax – appeal against a notice of determination – permission given to appeal out of time – appeal heard immediately after out of time application – had Deceased reduced the value of her estate some years before she died – if so was there a gift with reservation – no reduction in value of estate – gift with reservation not considered – appeal dismissed

[2016] UKFTT 523 (TC)
Bailii
England and Wales

Inheritance Tax

Updated: 01 November 2021; Ref: scu.567978

Pitt and Another v Holt and Others: ChD 18 Jan 2010

The deceased had created a settlement in favour of his wife. He suffered serious injury and placed the damages in trust, but in a form which created an unnecessary liability to Inheritance Tax on his death. The wife’s mental health act receiver now sought the unravelling of the trust based on either Hastings Bass or mistake.
Held: The rule in Hastings-Bass could be used by others than only trustees. Robert Englehart QC said: ‘A mere failure by someone to take a material consideration into account in the conduct of his own affairs will not justify setting aside for mistake. It was said in argument before me that the law allows you to be as foolish as you like with your own property. On the other hand, there certainly is jurisdiction, irrespective of any trust or fiduciary element, to set aside a voluntary transaction where there has been an operative mistake. Nevertheless, for the rule in Hastings-Bass to apply there is no need to identify a mistake as such, as opposed to a failure to take a relevant consideration into account.’ though there was no real mistake, only a failure to address the effect of the arrangement fully, the rule in Hastings-Bass could be applied and the trust varied.

Robert Englehart, QC
[2010] EWHC 236 (Ch)
Bailii, Times
Mental Health Act 1983
England and Wales
Citing:
CitedSieff v Fox ChD 23-Jun-2005
The advisers to trustees wrongly advised the trustees about the tax consequences of exercising a power of appointment in a certain way. As a result a large unforeseen Capital Gains Tax liability arose. The trustees sought to set aside the . .
CitedRe Hastings-Bass; Hastings v Inland Revenue CA 14-Mar-1974
Trustees of a settlement had exercised their power of advancement under the section, in order to save estate duty by transferring investments to be held on the trusts of a later settlement. However the actual effect of the advancement was that the . .
CitedMettoy Pension Trustees v Evans ChD 1990
Where a trustee acts under a discretion given to him by the terms of the trust the court will interfere with his action if it is clear that he would not have so acted as he did had he not failed to take into account considerations which he ought to . .
CitedByng v London Life Association CA 1990
The venue selected for a meeting of the members of a company was too small to accommodate all the members who attended, and so the chairman adjourned the meeting to an alternative venue.
Held: The decision by the chairman was set aside on the . .
CitedGibbon v Mitchell ChD 1990
G executed a deed surrendering his life interest in a trust fund in order to vest the property in his two children: the deed did not have that effect because of two errors (one of which was ignoring the fact that his life interest was subject to . .
CitedHunter v Senate Support Services Ltd and others ChD 2005
The court set aside a forfeiture of shares for non-payment of a call. The decisions of the directors to forfeit the shares and to transfer the forfeited shares to the group holding company were flawed, though not improperly motivated, because the . .
CitedEdge and others v Pensions Ombudsman and Another CA 29-Jul-1999
The Pensions Ombudsman was wrong to set aside the decision of pensions trustees where that decision was properly made within the scope of a discretion given to the Trustees. He should not carry out an investigation where no particular benefit could . .
CitedEquitable Life Assurance Society v Hyman HL 20-Jul-2000
The directors of the Society had calculated the final bonuses to be allocated to policyholders in a manner which was found to be contrary to the terms of the policy. The language of the article conferring the power to declare such bonuses contained . .
CitedAnker-Petersen v Christensen ChD 2002
Where a mistake is made as to the effect of an appointment under a trust it may be possible to invoke the court’s jurisdiction to rescind the appointment. Davis J considered Millett J’s distinction between ‘effect’ and ‘consequences’: ‘An example in . .
CitedOgden and Another v Trustees of the RHS Griffiths 2003 Settlement and others; In Re Griffiths deceased ChD 25-Jan-2008
A life-time transfer which had been made under a mistake as to the donor’s chances of surviving long enough for the transfer to be exempt from Inheritance Tax was set aside. Unbeknown to the donor, he had lung cancer at the time.
Held: Lewison . .
CitedWolff v Wolff ChD 6-Sep-2004
The court considered its ability to redraw a document where its legal effect was misunderstood. . .
CitedAbacus Trust Company (Isle of Man) Colyb Limited v Barr, Barr, and Barr ChD 6-Feb-2003
The court considered the Rule in Hastings-Bass, and specifically (1) whether the trustee’s decision is open to challenge when the failure to take a consideration into account is not attributable to a breach of fiduciary duty on the part of the . .
CitedOgilvie v Littleboy CA 1897
Lindley LJ discussed the variation of a gift for mistake: ‘Gifts cannot be revoked, nor can deeds be set aside, simply because the donors wish they had not made them and would like to have back the property given. Where there is no fraud, no undue . .
CitedBurrell and Sharman v Burrell, Shore, Tyrrell, etc ChD 23-Feb-2005
burrell_burrellChD05
Shares were appointed by trustees in the mistaken belief that they attracted business property relief from Inheritance tax. They sought to set aside the appointment.
Held: Mann J applied the rule in Stannard v Fisons Pensions Trust and . .

Cited by:
CitedFutter and Another v Futter and Others ChD 11-Mar-2010
Various family settlements had been created. The trustees wished to use the rule in Hastings-Bass to re-open decisions they had made after receiving incorrect advice.
Held: The deeds were set aside as void. The Rule in Hastings-Bass derives . .

Lists of cited by and citing cases may be incomplete.

Trusts, Wills and Probate, Inheritance Tax

Leading Case

Updated: 01 November 2021; Ref: scu.396742

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 captal. The revenue contended that the gift by a Jersey resident was to a Jersey Trust which was not solely charitable not being subject only to UK law.
Held: The authority as to the charity point was unassailable and the trustees’ appeal om that point failed. However, the court could not reconcile the question as to freedom of movement under European law, and it asked the parties to consider a question for referral to the European Court o Justice.

Moore-Bick VP CA, Tomlinson, Kitchin LJJ
[2016] EWCA Civ 938, [2016] WLR(D) 496
Bailii, WLRD
Inheritance Tax Act 1984 23, TFEU 63, Income Tax Act 2007 989
England and Wales
Citing:
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 . .
CitedCamille and Henry Dreyfus Foundation Inc v Inland Revenue Commissioners CA 1954
The Court considered whether it had jurisdiction to make an order with respect to a company registered in New York for objects which were charitable according to the laws of England.
Held: The Revenue’s appeal against a finding that the . .
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 . .
CitedBarras v Aberdeen Steam Trawling and Fishing Co HL 17-Mar-1933
The court looked at the inference that a statute’s draughtsman could be assumed when using a phrase to rely on a known interpretation of that phrase.
Viscount Buckmaster said: ‘It has long been a well established principle to be applied in the . .
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 . .
CitedHM Inspector of Taxes v Dextra Accessories Ltd HL 7-Jul-2005
The taxpayer companies had paid funds into a trust for employees. They sought to set off the payments against their liability to corporation tax. The revenue argued that they were deductible only in the year in which they were paid to the employees. . .

Lists of cited by and citing cases may be incomplete.

Inheritance Tax, Charity, European

Updated: 31 October 2021; Ref: scu.569895

Parry and Others v Revenue and Customs: FTTTx 7 May 2014

INHERITANCE TAX – transfer of funds to personal pension plan while diagnosed with terminal cancer – whether transfer of value – omission to take lifetime benefits – whether disposition and transfer of value – appeal allowed in part
[2014] UKFTT 419 (TC)
Bailii
England and Wales
Cited by:
Appeal fromRevenue and Customs v Representatives of Staveley (Deceased) UTTC 10-Jan-2017
Failure to take pension benefits – Inheritance Tax
UTTC INHERITANCE TAX – whether transfer of funds to a personal pension plan was a transfer of value – Inheritance Tax Act 1984, s 3(1) and s 10 – whether deceased’s omission to take lifetime pension benefits was . .
At FTTTxRevenue and Customs v Parry and Others CA 16-Oct-2018
Pension Accumulation was taxable
The court was asked whether the pension scheme transfer by the late Mrs R F Staveley, and her omission to take income benefits which were then payable, constituted, or are to be treated as constituting, for the purposes of Inheritance Tax 1984 . .
At FTTTxRevenue and Customs v Parry and Others SC 19-Aug-2020
Whether the pension scheme transfer by the late Mrs Staveley, and her omission to take income benefits which were then payable, constituted, or are to be treated as constituting, for the purposes of the Inheritance Tax 1984 a ‘disposition’ which is . .

Lists of cited by and citing cases may be incomplete.
Updated: 23 August 2021; Ref: scu.526859

Gray v Inland Revenue Commissioners: CA 24 Feb 1994

Partnership interests in a tenanted freehold estate can be valued together. The court considered the ‘statutory hypothetical sale’ when valuing property for Inheritance Tax purposes: ‘The property must be assumed to have been capable of sale in the open market, even if in fact it was inherently unassignable or held subject to restrictions on sale. The question is what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date (see IRC -v- Crossman [1937] AC 26). Furthermore, the hypothesis must be applied to the property as it actually existed and not to some other property, even if in real life a vendor would have been likely to make some changes or improvements before putting it on the market (see Duke of Buccleuch v IRC [1967] 1 AC 506 at 525). To this extent, but only to this extent, the express terms of the statute may introduce an element of artificiality into the hypothesis. In all other respects, the theme which runs through the authorities is that one assumes that the hypothetical vendor and purchaser did whatever reasonable people buying and selling such property would be likely to have done in real life.
Times 24-Feb-1994, [1994] STC 360
Inheritance Taxes Act 1974
England and Wales
Citing:
CitedInland Revenue Commissioners v Crossman HL 1937
For a valuation for estate taxes, the value is what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date.
Lord Russell of Killowen said that a share is the interest of a . .
CitedDuke of Buccleuch v Inland Revenue Commissioners HL 1967
When a valuation was to be attributed to a property the test must be applied to the property as it actually existed and not to some other property, even if in real life a vendor would have been likely to make some changes or improvements before . .

Cited by:
CitedRyde International Plc v London Regional Transport CA 5-Mar-2004
The landowner had developed land which was then made the subject of compulsory purchase. The court was asked how the compensation was to be calculated. The landowner expected to sell the development as a whole. The respondent argued that the profit . .

These lists may be incomplete.
Updated: 09 April 2021; Ref: scu.80993

Glowacki (Deceased) v Revenue and Customs: SCIT 21 Aug 2007

SCIT INHERITANCE TAX – Deed of Variation – variation purporting to take effect as a gift by the deceased before death – whether within s 142 IHTA 1984 and an exempt transfer under s 17 – no – Revenue determination that nil rate band to be set against value of ‘gifted’ property based on variation taking effect – variation of no effect because conditional on intended tax effect – determination accordingly quashed.
[2007] UKSPC SPC00631
Bailii
Inheritance Tax Act 1984 142

Updated: 05 February 2021; Ref: scu.262389

Grimwood-Taylor and Another v Inland Revenue: SCIT 23 Nov 1999

SCIT INHERITANCE TAX -Exempt transfers and relief – Business property – Relevant business property – Shares held by Deceased in two companies – Whether the business carried on by the companies was excluded from business property relief as consisting wholly or mainly of one or more of dealing in securities, stocks or shares, land or buildings or making or holding investments – Whether the relevant companies were, with one or more other companies members of a group – Whether the business of the company or either of them was carried on otherwise than for gain – Inheritance Tax Act 1984 Sections 103, 104, 105, 111 and 112.
[1999] UKSC SPC00223
Bailii

Updated: 12 January 2021; Ref: scu.195347

The heirs of H Barbier v Inspecteur van de Belastingdienst Particulieren/Ondernemingen buitenland te Heerlen: ECJ 11 Dec 2003

ECJ Judgment – Interpretation of Articles 48 and 52 of the EEC Treaty (subsequently Articles 48 and 52 of the EC Treaty, now, after amendment, Articles 39 EC and 43 EC), Article 67 of the EEC Treaty (subsequently Article 67 of the EC Treaty, repealed by the Treaty of Amsterdam), Articles 6 and 8a of the EC Treaty (now, after amendment, Articles 12 EC and 18 EC) – Directives 88/361/EEC and 90/364/EEC – Inheritance tax – Requirement of cross-border economic activity – Prohibition of discrimination on the basis of Member State of residence.
C-364/01, [2003] EUECJ C-364/01
Bailii
European

Updated: 11 January 2021; Ref: scu.189880

Palliser v Revenue and Customs Re Wedderburn Road: UTLC 16 Mar 2018

Inheritance Tax – valuation under s160 Inheritance Tax Act 1984 – maisonette – whether hope value for extension to be taken into account – analysis of comparables – value of appellant’s undivided share determined at pounds 1,603,930 – appeal allowed in part
[2018] UKUT 71 (LC)
Bailii
Inheritance Tax Act 1984 160
England and Wales

Updated: 22 December 2020; Ref: scu.606889

Starke and Another (Executors of Brown Deceased) v Inland Revenue Commissioners: ChD 24 Feb 1994

Mr Brown, the deceased, had owned a site on which was built a substantial farmhouse, with six bedrooms, and various outbuildings. The site formed part of a farm and the issue was whether the site was ‘agricultural land or pasture’ within the meaning of section 115(2).
Held: A site with farm buildings only is not within the definition of agricultural land in the section. Such buildings had to be proportionate in size and nature to the requirements of the farming activities: ‘If cottages, farm buildings and farmhouses which are occupied and used for the purposes of agriculture fall within the meaning of agricultural land it is difficult to see what the point is of the ‘character appropriate’ requirement in limb (3). If, however, cottages, farm buildings and farmhouses, together with any land occupied with them, are not within the expression ‘agricultural land or pasture’ but will constitute ‘agricultural property’ if used in connection with agricultural land or pasture provided that they are of a character appropriate to such agricultural land or pasture (that is, are proportionate in size and nature to the requirements of the farming activities conducted on the agricultural land or pasture in question) then it is possible to attribute a full meaning to that limb.’
‘Agricultural property’ for Inheritance tax purposes was restricted to pasture land which remained undeveloped.
Blackburne J
Gazette 30-Mar-1994, Times 24-Feb-1994, [1994] STC 295
Inheritance Tax Act 1984 115
England and Wales
Cited by:
Appeal fromStarke and another (Executors of Brown decd) v Inland Revenue Commissioners CA 23-May-1995
The deceased had owned a site of 2.5 acres on which were built a large farmhouse, and other outbuildings.
Held: The court identified the identify the three separate dimensions to the definition of agricultural property under the Act. The . .
Gazette 14-Jun-95, Independent 23-May-95, [1996] 1 All ER, [1995] STC 689
CitedLloyds TSB Private Banking Plc (personal representative of Rosemary Antrobus deceased) v Inland Revenue (Capital Taxes); Re Cookhill Priory (No 2) LT 10-Oct-2005
LT TAX – Inheritance Tax – agricultural property relief – agricultural value – agricultural property – farmhouses – whether house occupied by ‘lifestyle’ farmer could be farmhouse – held bid of such person could . .
[2005] EWLands DET – 47 – 2004
CitedLloyds TSB Bank Plc (Antrobus Deceased) v Inland Revenue (No 1) SCIT 17-Oct-2002
SCIT INHERITANCE TAX – agricultural property relief – freehold house which was owned and occupied by the deceased – agreed that it was a farmhouse – whether it was of a character appropriate to the property – yes . .
[2002] UKSC SPC00336

These lists may be incomplete.
Updated: 19 December 2020; Ref: scu.89502

In re Nichols, deceased: CA 2 Jan 1975

The father, Lord Nichols, gave property to his sons who then leased it back to him. On the father’s death the revenue claimed duty.
Held: Goff LJ: ‘Having thus reviewed the authorities, we return to the question what was given, and we think that a grant of the fee simple, subject to and with the benefit of a lease back, where such a grant is made by a person who owns the whole freehold free from any lease, is a grant of the whole fee simple with something reserved out of it, and not a gift of a partial interest leaving something in the hands of the grantor which he has not given. It is not like a reversion or remainder expectant on a prior interest. It gives an immediate right to the rent, together with a right to distrain for it, and, if there be a proviso for re-entry, a right to forfeit the lease. Of course, where, as in Munro v. Commissioner of Stamp Duties (N.S.W.) [1934] A.C. 61, the lease, or, as it then may have been, a licence coupled with an interest, arises under a prior independent transaction, no question can arise because the donor then gives all that he has, but where it is a condition of the gift that a lease back shall be created, we think that must, on a true analysis, be a reservation of a benefit out of the gift and not something not given at all.’ Having referred to the gift of the freehold and the material estate duty provisions, and then stated the three problems thereby posed: ‘whether all that was given was the beneficial interest in the estate shorn of the benefit of the rights and interests of the donor under the lease back, in which case, prima facie, the gift must fall outside the statutory provision, or whether the gift was of the whole beneficial interest in the property, in which case it is not disputed that the lease back must have prevented the son from assuming bona fide possession and enjoyment immediately upon the gift to the entire exclusion of the father, and also whether the covenants in the lease are such that in any case the son cannot be said to have assumed such possession and enjoyment to the entire exclusion of any benefit to the father by contract or otherwise within the meaning of the section.’ There were two unanswerable reasons why the case was caught by the statutory provision, i.e. the full repairing covenant on the part of the son and his covenant to pay tithe redemption annuity.
Russell and Cairns LJJ and Goff J
[1975] 1 WLR 534
Finance Act 1894 2(1)(c)
England and Wales
Citing:
Appeal fromIn re Nichols, deceased ChD 1974
The father, Lord Nichols, in 1954, decided to make a gift of his family home and the surrounding estate to his son, aged 22. The father was to transfer the estate and the son would immediately lease the bulk of the property back to the father, the . .
[1974] 1 WLR 296
CitedAttorney General v Earl Grey QBD 1898
. .
[1898] 1 QB 318
CitedAttorney General v Earl Grey CA 2-Jan-1898
The court considered the effectiveness of a gift from father to son for estate duty purposes, where the revenue said that the father had reseved an interest in the land to himself. The conveyance to the defendant donee contained the following . .
[1898] 2 QB 534
CitedGrey (Earl) v Attorney General HL 1900
The donor conveyed land to his son by way of gift but reserved an annual rentcharge during his life which was charged on the land conveyed and which his son covenanted to pay (together with the other liabilities of the donor), and retained the right . .
[1900] AC 124
CitedRe Cochrane 1905
(High Court of Ireland) The court considered the effectivenmess of a gift with a reservation to the donor, distinguishing Earl Grey: ‘The limitation of this annuity, although prior to the gift, was, as well as being charged on the land, secured by . .
[1905] 2 IR 626
CitedMunro v Commissioner for Stamp Duties PC 1933
In 1909, the deceased orally agreed with his six children that he and they would carry on the business of graziers on land owned by him as partners under a partnership at will. In 1913 the deceased transferred by way of gift the freehold interest in . .
[1934] AC 61, [1933] All ER Rep 185
CitedCommissioner of Stamp Duties of New South Wales v Perpetual Trustee Co Ltd PC 1943
The Board consideerd the application of the retention of benefit rules. Lord Russell of Killowen said: ‘the entire exclusion of the donor from . . enjoyment which is contemplated . . is entire exclusion from . . enjoyment of the beneficial interest . .
[1943] AC 425
CitedOakes v Commissioner of Stamp Duties of New South Wales PC 1953
oakes_csdnswPC1954
A father made a gift of land in favour of himself and his four children in equal shares but then retained wide powers of management for which he reserved the right to charge remuneration.
Held: The donor was entirely excluded from the . .
[1954] AC 57, [1953] 2 All ER 92

Cited by:
CitedIngram 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 . .
[1998] UKHL 47, [2001] AC 293, [[1999] 1 All ER 297, [1999] 2 WLR 90, (1999) STC 37

These lists may be incomplete.
Updated: 15 December 2020; Ref: scu.182741

Ingram and Another v Inland Revenue Commissioners: ChD 23 May 1995

Lady Ingram had first conveyed properties to her solicitor who on the next day let the properties back to her, and on the day after conveyed the freehold of the properties to her family.
Held: The leases in favour of Lady Ingram, having been granted by a nominee to his principal, were a nullity. However, this did not mean that the leasehold interest which Lady Ingram admittedly acquired against the trustees was a benefit reserved. There had been no point of time at which the trustees and beneficiaries had held the property otherwise than subject to the leasehold interests. Lady Ingram never intended to give them the property free from those interests and they were not therefore included in the gift. The freehold interests in the property were subject to an equitable interest in Lady Ingram equivalent to that which she would have taken had the leases been valid, enjoyed to the entire exclusion of Lady Ingram and of any benefit to her by contract or otherwise. S102 had no application. ‘It appears to me that, whether Lady Ingram took her leasehold interests in equity or by the operation of section 65 of the Law of Property Act, what the trustees and the beneficiaries under the declarations of trust have finished up with is the property subject to those leasehold interests. Unless it can be said that there was a period or point of time at which the trustees and beneficiaries had a more extensive interest out of which the leasehold interests were carved, the subject matter of the gift made by Lady Ingram was the property shorn of those leasehold interests. In deciding whether or not this could be said two things appear to me to be of cardinal importance. First Lady Ingram never intended to give the property to the trustees and beneficiaries free from the leasehold interests which it is common ground that she had. Secondly the creation and existence of these leasehold interests was not in any way dependent upon the concurrence of the trustees and beneficiaries, still less upon the performance by them of some positive act. In terms of substance, Lady Ingram had her leasehold interests from the very same moment that the trustees and beneficiaries had the property subject to those interests.’
References: Times 23-May-1995, Gazette 14-Jun-1995, Ind Summary 05-Jun-1995, [1995] 4 All ER 334
Judges: ferris J
Statutes: Finance Act 1986 102, Inheritance Tax Act 1984 102(2)
This case cites:

  • Cited – Kildrummy (Jersey) Ltd v Inland Revenue Commissioners IHCS 1990
    It was not possible in Scottish law for a man to grant a lease to a nominee for himself: (Lord Hope) ‘I have, as I have said, no difficulty in the concept by which the title to property and the beneficial interest are separated, the title being held . .
    ([1990] STC 657)
  • Cited – Rye v Rye HL 1962
    Two brothers were in partneship in unequal shares, but acquired a property for use by the business which they held in equal shares. They agreed a parol yearly tenancy between themselves as owners and as partners. After one died his son took over his . .
    ([1962] AC 496, [1962] 1 All ER 146)
  • 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 . .
    ([1952] AC 15, , [1951] UKHL 3, [1951] 2 All ER 473)

This case is cited by:

  • Appeal from – Ingram and Palmer-Tomkinson (Executors of the Estate of Lady Jane Lindsay Morgan Ingram Deceased) v Commissioners of Inland Revenue CA 28-Jul-1997
    The deceased had first conveyed property to her solicitor. Leases back were then created in her favour, and then the freeholds were conveyed at her direction to her children and grandchildren. They were potentially exempt transfers.
    Held: . .
    (Times 11-Sep-97, Gazette 10-Sep-97, , [1997] EWCA Civ 2212, [1997] 4 All ER 395, [1997] STC 1234)
  • At First Instance – 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 . .
    (, , [1998] UKHL 47, [2001] AC 293, [[1999] 1 All ER 297, [1999] 2 WLR 90, (1999) STC 37)

These lists may be incomplete.
Last Update: 21 November 2020; Ref: scu.82331

Inland Revenue Commissioners v Lloyds Private Banking Ltd: ChD 10 Apr 1998

Provision in will where one tenant in common directed that surviving tenant be allowed to occupy house until death and thereafter gave the share to his daughter created a sufficient interest for the survivor to be charged to tax.
References: Times 10-Apr-1998, Gazette 13-May-1998
Statutes: Inhertance Tax Act 1984

Last Update: 21 November 2020; Ref: scu.82349

Inland Revenue Commissioners v Mallender and Others: ChD 30 Mar 2001

The taxpayer was a member of Lloyds. He had to obtain a guarantee of his liabilities from his bank, who in turn took a charge over a freehold reversion which he owned. It was claimed that having been given in charge for business purposes, the taxpayer could take advantage of business property relief for Inheritance tax purposes. This was not correct. The use of the asset to support a guarantee did not of itself make the asset one used for business purposes.
References: Times 30-Mar-2001
Statutes: Inheritance Tax Act 1984 105(1) (a)

Last Update: 21 November 2020; Ref: scu.82351

In Re Ratcliffe, Deceased: ChD 19 Mar 1999

When apportioning a residuary estate between charitable and non-charitable beneficiaries, the debts should be paid first, the estate divided, and only then the Inheritance Tax calculated. The gross division system used in this case had prejudiced the non-charitable beneficiaries.
References: Times 19-Mar-1999, Gazette 17-Mar-1999, Gazette 31-Mar-1999
This case cites:

These lists may be incomplete.
Last Update: 21 November 2020; Ref: scu.82145

Inland Revenue v Earl of Buchan: HL 3 Dec 1908

The Succession Duty Act 1851, sec. 15, enacts-‘Where the title to any succession shall be accelerated by the surrender or extinction of any prior interests, then the duty thereon shall be payable at the same time and in the same manner as such duty would have been payable if no such acceleration had taken place.’
An heir of entail in possession of an entailed estate under an entail dated prior to 1848, in 1872 transferred his interest to his son, the next heir, born subsequent to 1848 and not yet twenty-five, for the purpose of certain family arrangements with a view to borrowing money. In 1875, on the son’s attaining twenty-five, the father and son applied for power to disentail, and disentailed. The son continued to possess the estate, and in 1905 the Crown claimed Succession Duty in respect of the succession on the father’s death, which had occurred in 1898.
Held that, under section 15 of the Succession Duty Act 1853, succession duty was exigible.
References: [1908] UKHL 91, 46 SLR 91
Links: Bailii
Judges: Lord Chancellor (Loreburn), Lord Robertson, and Lord Collins
Jurisdiction: Scotland

Last Update: 21 November 2020; Ref: scu.621530

Lord Advocate v Earl of Moray’s Trustees: HL 4 Aug 1905

The Finance Act 1894 by section 9 (5) makes provision that the person required to pay the estate-duty in respect of any property shall have power to raise the amount of such duty by the sale or mortgage of or a terminable charge on the property or any part thereof. Section 9 (6) enacts-‘A person having a limited interest in any property, who pays the estate-duty in respect of that property, shall be entitled to the like charge as if the estate-duty in respect of that property had been raised by means of a mortgage to him.’
Held 1st (approving the judgment of the First Division in Laurie, February 22, 1898, 25 R. 636, 35 S.L.R. 496) that an heir of entail in possession is ‘a person having a limited interest’ in the estate in the sense of the statute; and 2nd ( diss Lord Robertson- rev judgment of the First Division) that the executors of a deceased heir of entail are liable for estate-duty upon instalments of estate-duty paid by him, although no steps had been taken by him to perfect the charge on the estate, the instalments forming by force of the statute, and without any such steps being taken, a charge upon the estate transmissible by him and carried to them.
Opinion (per Lord Dunedin) that the charge upon the entailed estate formed by the instalments of estate-duty paid by the heir of entail in possession could be perfected by his executors by means of adjudication.
Observations on the application to Scotland of an imperial statute conceived in terms inappropriate to Scotland.
References: [1905] UKHL 839, 42 SLR 839
Links: Bailii
Judges: Lord Chancellor (Halsbury), Lords Macnaghten, Davey, James Of Hereford, Robertson, and Dunedin
Jurisdiction: Scotland

Last Update: 21 November 2020; Ref: scu.621188

Attorney General v Milne: HL 7 Apr 1914

Section 1 of the Finance Act 1894 enacts that estate duty should be leviable on the principal value of all property, real or personal, settled or not settled, which passes on the death of the deceased.
Section 2, sub-section 1, as amended by section 59 of the Finance (1909-10) Act 1910, enacts-‘Property passing on the death of the deceased shall be deemed to include’ property taken under a disposition purporting to act as an immediate gift inter vivos, unless the disposition was made three years before the death of the disponer.
Section 5, sub-section 1, enacts-When property in respect of which estate duty is leviable is settled by the will of the deceased, or having been settled by some other disposition passes under that disposition on the death of the deceased to some person not competent to dispose of the property (a) a further estate duty called settlement estate duty on the principal value of the settled property shall be levied.
Held that qua section 5 of the Finance Act 1894 the property must ‘pass at the death of the deceased,’ not constructively but actually. Therefore where an immediate life-interest is taken under a settlement, settlement estate duty is not payable under section 5, sub-section 1 (a), upon the death of the settlor within three years of the execution of the deed.
Judgment of the Court of Appeal, 1913, 2 Q.B. 606, affirmed, Lord Dunedin dissenting.
References: [1914] UKHL 636, 52 SLR 636
Links: Bailii
Judges: Lord Chancellor (Viscount Haldane), Lords Dunedin, Atkinson, and Parker
Jurisdiction: England and Wales

Last Update: 21 November 2020; Ref: scu.620710

Attorney General v Duke of Richmond: HL 26 Jul 1909

An heir of entail in possession of Scottish heritage carried out disentailing procedure. The heritage was disentailed, the valued interests of the succeeding heirs being charged thereon. This was admittedly done with the object of reducing the total value of the estate for estate duty purposes by the amounts so charged upon the lands. Held (Lords Collins and Shaw of Dunfermline diss.) that the interests charged upon the land were incumbrances created bona fide and wholly for the deceased’s own use and benefit, and that accordingly those amounts fell to be deducted from the deceased’s estate under section 7, sub-section 1 ( a), of the Finance Act 1894.
Per Lord Macnaghten – ‘The incumbrances intended to secure those debts were created bona fide in the only sense in which bona fides can be used in such a connection, that is to say, the debts and incumbrances were not fictitious or colourable, but real and genuine to all intents and purposes. Were these debts and incumbrances incurred and created ‘wholly for the deceased’s own use and benefit?’ . . . It seems to me that the words of the enactment are satisfied if the direct and immediate purpose of the person incurring the debt, or creating the incumbrance, is to make himself master of a sum of money over which he and he alone has power of disposition; and that it was not intended that there should be any inquiry into the ulterior and more remote purposes of the transaction or any investigation into motives.’
References: [1909] UKHL 570
Links: Bailii
Judges: Lord Chancellor (Loreburn), Lords Macnaghten, Atkinson, Collins, and Shaw
Jurisdiction: England and Wales

Last Update: 21 November 2020; Ref: scu.620585

Fitzwilliam (Countess) and Others v Inland Revenue Commissioners: HL 9 Jul 1993

An Inheritance Tax avoidance scheme was valid. When testing whether a series of pre-ordained steps could be viewed as one artificial whole, it was not open to the Commissioners to pick and to choose which steps were to be counted. The exercise became artificial when some were excluded at the option of the commissioners. Pre-planning of steps alone not sufficient to attract Ramsay interpretation
References: Times 09-Jul-1993, Gazette 08-Dec-1993, Ind Summary 19-Jul-1993
Statutes: Finance Act 1975 Schedule 5

Last Update: 21 November 2020; Ref: scu.80587

Ashcroft v Barnsdale and Others: ChD 30 Jul 2010

The parties sought to rectify a deed of family arrangement varying a will. The variation deed had had several mistakes which in fact increased the sum of Inheritance Tax owed. HMRC refused to accept the rectification deed unless approved by the court.
Held: The request for rectification was granted. The claimant had demonstrated a specific common intention as to how the parties’ fiscal objectives were to be achieved; and that, owing to a mistake in the way in which that intention was expressed in the Deed of Variation, effect had not been given to that intention.
Hodge J QC said: ‘The court cannot rectify a document merely because it fails to achieve the fiscal objectives of the parties to it. A mere misapprehension as to the tax consequences of executing a particular document will not justify an order for its rectification. The specific intention of the parties as to how the fiscal objective was to be achieved must be shown if the court is to order rectification. The court will order the rectification of a document only if it is satisfied by cogent evidence (sufficient to counteract the effect of the parties’ subscription to the relevant document) that: (1) the document does not give effect to the true agreement or arrangement between the parties, and (2) there is an issue, capable of being contested, between the parties; it being irrelevant, first, that rectification of the document is sought or consented to by all of them; and, secondly, that rectification is desired because it has beneficial fiscal consequences. Conversely, the court will not order rectification of a document if the parties’ rights will be unaffected, and if the only effect of the order will be to secure a fiscal benefit for one or more of them.’
References: [2010] EWHC 1948 (Ch)
Links: Bailii
Judges: Hodge J QC
Statutes: Inheritance Tax Act 1984 211
Jurisdiction: England and Wales
This case cites:

  • Cited – Whiteside v Whiteside CA 1950 ([1950] Ch 65)
    The husband had executed a deed in favour of his former wife after dissolution of their marriage covenanting to pay a specified sum per annum free of income tax up to but not exceeding a stated amount. This provision was in substitution for one . .
  • Cited – Gibbon v Mitchell ChD 1990 ([1990] 1 WLR 1304, [1990] 3 All ER 338)
    G executed a deed surrendering his life interest in a trust fund in order to vest the property in his two children: the deed did not have that effect because of two errors (one of which was ignoring the fact that his life interest was subject to . .
  • Cited – Racal Group Services Limited v Ashmore CA 1995 ([1995] STC 1151)
    The company had covenanted to pay an annual sum to charity. Since the last payment under the covenant was to be made less than three years after the execution of the deed, an intended tax advantage was not secured.
    Held: The company’s appeal . .
  • Cited – Allnutt and Another v Wilding and others; Re Strain (deceased) CA 3-Apr-2007 (, [2007] EWCA Civ 412, [2007] WTLR 941, 9 ITELR 806)
    The trustees of a discretionary settlement requested its rectification on the basis that the now deceased settlor’s solicitor had mistakenly not appreciated the need to confer interests in possession on the beneficiaries, with the consequence that . .
  • Cited – Oun v Ahmad ChD 19-Mar-2008 (, [2008] EWHC 545 (Ch))
    The parties agreed in writing for the sale of leasehold property to the claimant. One document had been signed, but later one said that it had not included an aportionment. Another document then set out the apportionment. When the defendant refused . .
  • Cited – Chartbrook Ltd v Persimmon Homes Ltd and Others HL 1-Jul-2009 (, [2009] UKHL 38, Times 02-Jul-09, [2009] 27 EG 91, [2009] BLR 551, 125 Con LR 1, [2009] 3 WLR 267, [2010] 1 P and CR 9, [2009] Bus LR 1200, [2009] NPC 86, [2009] CILL 2729, [2009] 4 All ER 677, [2009] 1 AC 1101, [2009] WLR (D) 223, , )
    The parties had entered into a development contract in respect of a site in Wandsworth, under which balancing compensation was to be paid. They disagreed as to its calculation. Persimmon sought rectification to reflect the negotiations.
    Held: . .

These lists may be incomplete.
Last Update: 01 November 2020; Ref: scu.421236

Der Merwe v Goldman and Others: ChD 11 Apr 2016

The claimants had executed a deed creating a trust of their house, in ignorance of tax changes making such an arrangement liable to Inheritance Tax. The claimant now sought the setting aside of the settlement.
Held: The order was made, no consideration having been given.
References: [2016] EWHC 790 (Ch), [2016] WLR(D) 179, [2016] 4 WLR 71, [2016] WTLR 913
Links: Bailii, WLRD
Judges: Morgan J
Statutes: Inheritance Tax Act 1984 1 2 3
Jurisdiction: England and Wales

Last Update: 19 October 2020; Ref: scu.562026

Hood v Revenue and Customs: FTTTx 2 Feb 2016

Inheritance Tax : Gifts – – deceased granted reversionary sub-lease to sons out of her head leasehold interest – licence to sub-let given by head landlord to deceased – sub-lease provided for same covenants, including repairing covenants, as in head lease – whether property disposed of by way of gift was subject to a reservation under s 102 FA 1986 – application of second limb of s 102(1)(b) – identification of donated property – whether benefit ‘trenched upon’ donees’ enjoyment of the donated property – Buzzoni considered
References: [2016] UKFTT 59 (TC), [2016] SFTD 351, [2016] STI 1159, [2016] WTLR 835
Links: Bailii
Jurisdiction: England and Wales

Last Update: 16 October 2020; Ref: scu.559927

Green v Revenue and Customs: FTTTx 21 May 2015

FTTTx INHERITANCE TAX – whether appeal automatically struck out – whether Appellant should be permitted to give oral evidence – Appellant’s lifetime transfers to a settlement – furnished holiday letting business – whether relevant business property – whether business consisted mainly of the making and/or holding of investments – yes – appeal dismissed.
References: [2015] UKFTT 236 (TC)
Links: Bailii
Jurisdiction: England and Wales

Last Update: 11 October 2020; Ref: scu.549504

Routier 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 for charitable purposes’ in section 23(6) requires not only that the charitable purposes be UK law charitable purposes but that the relevant trust be subject to the jurisdiction of the United Kingdom courts as well.’
The reasoning of the Court of Appeal in Dreyfus applies to the wording of section 23 of the IHTA. The Coulter Trust did not qualify for exemption under either limb of subsection (6) because it was not governed by United Kingdom law but by Jersey law: ‘The Appellants have not put forward any good reason why Parliament should have intended that the second limb of section 23 should be so much broader than the first, encompassing trusts governed by foreign law but limited to charitable bodies established under UK law. Another important plank in the reasoning of the Court in Dreyfus was that the distinction drawn between the first limb of section 37 (namely income of any body of persons or trust established for charitable purposes) and the second limb of section 37 (namely income which according to the rule established by deed of trust or will are applicable to charitable purposes only) was intended only to distinguish between income held by bodies which are exclusively charitable on the one hand and bodies which are not exclusively charitable but which hold the relevant income for exclusively charitable purposes on the other. It was not intended to be a difference beyond that, allowing a much wider geographic range of bodies to fall within the second limb than could fall within the first. ‘
References: [2014] EWHC 3010 (Ch), [2014] BTC 42, [2014] WLR(D) 449, [2014] STI 2931, [2015] STC 451, [2015] PTSR 60, [2014] WTLR 1717
Links: Bailii, WLRD
Judges: Rose DBE J
Statutes: Inheritance Tax Act 1984 23
Jurisdiction: England and Wales
This case cites:

  • Cited – Camille and Henry Dreyfus Foundation Inc v Inland Revenue Commissioners CA 1954 ([1954] 1 Ch 672)
    The Court considered whether it had jurisdiction to make an order with respect to a company registered in New York for objects which were charitable according to the laws of England.
    Held: The Revenue’s appeal against a finding that the . .
  • Cited – Camille and Henry Dreyfus Foundation Inc v Inland Revenue Commissioners HL 1956 ([1956] AC 39, [1955] 3 All ER 97, 36 TC 126, , [1955] UKHL TC – 36 – 126)
    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 . .
  • Cited – HM Inspector of Taxes v Dextra Accessories Ltd HL 7-Jul-2005 (, [2005] UKHL 47, Times 11-Jul-05, , [2005] STC 1111, [2005] BTC 355, (2003) 77 TC 146, 77 TC 146, [2005] 4 All ER 107, [2005] STI 1235, [2005] Pens LR 395)
    The taxpayer companies had paid funds into a trust for employees. They sought to set off the payments against their liability to corporation tax. The revenue argued that they were deductible only in the year in which they were paid to the employees. . .

This case is cited by:

  • At ChD – Routier and Another v Revenue and Customs CA 16-Sep-2016 (, [2016] EWCA Civ 938, [2016] WLR(D) 496, )
    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 . .

These lists may be incomplete.
Last Update: 05 October 2020; Ref: scu.536733

Gilchrist v Revenue and Customs: UTTC 11 Apr 2014

INHERITANCE TAX – discretionary settlement – 10-year charge – whether the proceeds of sale of scrip dividend shares to which s.249 ICTA 1988 applies are deemed to be income not only for the purposes of ICTA 1988 but also for the purposes of trust law generally and for the purposes of Inheritance Tax
References: [2014] UKUT 169 (TCC), [2015] CH 183, [2014] WTLR 1209, [2014] WLR(D) 205, [2015] 2 WLR 1, [2014] STC 1713, [2014] BTC 513, [2014] STI 1875, [2014] 4 All ER 943
Links: Bailii
Jurisdiction: England and Wales

Last Update: 28 September 2020; Ref: scu.525881

Mark Buzzoni and Others v HM Revenue and Customs – FTC/57-59/2011; UTTC 19 Oct 2012

References: [2012] UKUT 360 (TCC)
Links: Bailii
UTTC Whether s. 102(1)(b) of the Finance Act 1986 (gift with reservation) applies to a gift of a reversionary underlease containing covenants from the donee mirroring covenants in the donor’s head lease. Application of Ingram v. IRC. Decision of the First-tier Tribunal upheld: such covenants do constitute a reservation within the section.
Statutes: Finance Act 1986 102(1)(b)
This case cites:

This case is cited by:

HM Revenue and Customs v Hanson (As Trustee of The William Hanson 1957 Settlement); UTTC 17 May 2013

References: [2013] UKUT 224 (TCC)
Links: Bailii
Coram: Warren J
UTTTC INHERITANCE TAX – deemed transfer on death – deceased’s estate included a farmhouse – whether the farmhouse was agricultural property within section 115(2) Inheritance Tax Act 1984 – nature of the nexus required between a farmhouse and the agricultural land or pasture etc. in the definition – whether such nexus was occupation and ownership or only occupation -held, the nexus is only occupation – Special Commissioner’s decision in Rosser v IRC [2003] STC (SCD) 311 not followed – appeal from Tax Chamber dismissed.

HM Revenue and Customs v A M Brander As Exec of The Will of The Late Fourth Earl of Balfour; UTTC 16 Aug 2010

References: [2010] UKUT 300 (TCC), [2010] BTC 1656, [2010] STI 2427, [2010] WTLR 1545, [2010] STC 2666
Links: Bailii
Coram: Lord Hodge, Sir Stephen Oliver QC
UTTC Inheritance tax – Exempt transfers and relief – Business property relief Replacement property – Deceased having liferent interest in family estate – Deceased declared to be fee simple proprietor of the estate – Deceased entering into partnership with intended successor – Whether deceased’s interest in partnership, which subsisted immediately before his death, replaced previous business carried on by deceased – Whether business excluded from business property relief as consisting mainly of making or holding investments – Inheritance Tax 1984, ss 105(1), (3), 107.
Statutes: Inheritance Tax 1984 105(1) 105(3) 107
This case cites:

  • Cited – Tootal Broadhurst Lee Co Ltd -v- Inland Revenue Commissioners HL ([1949] 1 All ER 261)
    Fees received for the use of the taxpayer’s productive plant were not income from investment.
    Lord Norman defined the meaning of ‘investment’, saying: ‘The meaning of ‘investment’ is its meaning, not in the vernacular of the man in the street, . .
  • Cited – McCall and Another -v- HM Revenue & Customs CANI (Bailii, [2009] NICA 12, [2009] STC 990, [2009] STI 1124, [2009] BTC 8059)
    The deceased had inherited grass land from her husband. It had planning permission for development. The personal representatives appealed against a finding that relief was not available as a relevant business property. . .
  • Cited – Edwards (Inspector of Taxes) -v- Bairstow HL ([1956] AC 14, [1955] 3 All ER 48, [1955] 36 Tax Cas 207, Bailii, [1955] UKHL 3)
    The House was asked whether a particular transaction was ‘an adventure in the nature of trade’.
    Held: Although the House accepted that this was ‘an inference of fact’, on the primary facts as found by the Commissioners ‘the true and only . .