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Thomas James appears in Executors of the estate of Linington and another v HMRC

13th Feb 2023

On 30 January 2023, the First-tier Tribunal (Tax Chamber) handed down judgment in Executors of the estate of Linington and another v Revenue and Customs Commissioners [2023] UKFTT 89 (TC). Thomas James (led by James Henderson of Pump Court Tax Chambers) acted successfully for HMRC.

The decision concerns the inheritance tax valuation of trust interests transferred as part of a tax planning scheme, which sought to exploit a loophole in the excluded property provisions so as to reduce inheritance tax payable on death.

The scheme involved the carefully choreographed acquisition of a reversionary interest (ostensibly for no consideration) and discretionary income interest in an excluded property settlement based in the Isle of Man. It was materially identical to that previously considered by the First-tier Tribunal in Salinger v HMRC [2016] UKFTT 677 (TC), [2017] SFTD 316. In that case, the Tribunal held that the scheme succeeded as there had been no transfer of value on the purchase of the discretionary income interest, for which the taxpayer was considered to have paid a commensurate price.

The taxpayer in Linington submitted that Salinger was correct and should be followed. However, the Tribunal (Judge Brown) agreed with HMRC that the discretionary income interest (taken alone) had a nil value, and a substantial transfer of value had thereby occurred when the scheme was implemented. The decision can be read here.

Thomas James Thomas James Call 2018
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