Accuro Trust (Switzerland) SA v The Commissioners for HMRC
| Judge | TRIBUNAL JUDGE HARRIET MORGAN |
| Judgment Date | 28 April 2025 |
| Neutral Citation | [2025] UKFTT 464 (TC) |
| Year | 2025 |
| Court | First-tier Tribunal (Tax Chamber) |
| Counsel | Mr David Ewart Kc,Mr Rupert Baldry Kc,Mr Ben Elliott,For |
| Date | 28 April 2025 |
Neutral Citation: [2025] UKFTT 00464 (TC)
Case Number: TC09501
FIRST-TIER TRIBUNAL
TAX CHAMBER
Appeal reference: TC/2019/05025
INHERITANCE TAX – whether property in a settlement was excluded property under s 48(3)
IHTA for the purposes of IHT charges under Chapter III of Part III IHTA, whether s 255
applied and nature of the tribunal’s jurisdiction as regards the determination that it was not
proved to the satisfaction of HMRC that a repayment of tax was due under s 241 IHTA
Heard on: 20 to 24 March 2023
Judgment date: 28 April 2025
Before
TRIBUNAL JUDGE HARRIET MORGAN
Between
ACCURO TRUST (SWITZERLAND) SA
AS TRUSTEE OF THE TIODAB TRUST
Appellant
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant:MrDavidEwart KC,of counsel,instructed by the offices of Ms
Stephanie A Jarrett and Withers LLP
For the Respondents: Mr Rupert Baldry KC and Mr Ben Elliott, of counsel, instructed by
the General Counsel and Solicitor to HM Revenue and Customs
DECISION
Part A - Introduction
1.The appellant is the trustee of a settlement known as the Tiodab Trust (“the Trust”).
The appellant has appealed against three notices of determination issued under s 221 of the
Inheritance Tax Act1984 (“IHTA”) on 23 May2019. All referencesin this decision to
legislation are to provisions in IHTA as they were enacted and applicable at the relevant time
unless it is expressly stated otherwise. The dispute relates to whether inheritance tax (“ IHT”)
is payable under provisions inChapter III of Part III IHTA relatingto settlements (“the
settlements regime”).
Facts
2.The following facts are undisputed:
(1) On 14 September 1992, when he was neither domiciled nor deemed domiciled in
the United Kingdom (“UK”) for IHT purposes, the individual who set up the Trust
(“the Settlor”) settled $100 to create the Trust. The trustee of the Trust was Investec
Trust (Switzerland) S.A. subsequently known as Salamanca Group Trust (Switzerland)
SA and now known as Accuro Trust (Switzerland) SA (“the Trustee”).
(2)Additional funds were added to the Trust on various dates from 2 November 1992
to 6 May 1993 and on 24 December 1998 and 8 March 2005.
(3) On 6 April 2005 the Settlor becamedeemed domiciledinthe UKfor IHT
purposes. The issue is whether the appellant is subject to IHT as regards various events
which took place after the Settlor became deemed domiciled.
(4)On 16 March 2006 additional substantial cash funds were added to the Trust.
(5)On 3 April 2006 the Trustee acquired 12,487 class “A” shares with a par value of
€1.25 per share in Magnolia Investments & Partners SCA (“the A shares”) from the
Settlor for a total consideration of €250 and payment was made from the cash funds
added to the Trust on 16 March 2006.
(6)On25 October 2006 acapitaldistributionwasmadeoutoftheTrusttothe
Settlor’s wife.
(7) A ten-year anniversary of the Trust occurred on 14 September 2012. At that date,
the property held by the Trustee included the property contributed to or representing
property contributed to the Trust after the Settlor became deemed domiciled, the cash
funds contributed on 16 March 2006 and the cash proceeds from the sale of the A
shares (“the property”).
As explained below, the settlements regime imposes a “ten-year charge” to IHT on the
valueof “relevant property” held in a “settlement” immediately before a ten-year
anniversary. One of the main disputes in these proceedings is whether the property was
“relevant property” for the purposes of the ten-year charge.
(8) The Settlor ceased to be resident in the UK on 5 April 2013 havingbecome
resident in Switzerland on 26 March 2013 but remained deemed to be domiciled in the
UK for IHT purposes until 6 April 2016.
(9)The Trustee initially accounted for IHT on the basis that a ten-year charge was
due in respect of the value of the property, on the basis it was relevant property, but
later claimed a repayment of the sum paid:
(a)On 15 May 2013, the Trustee paid £1,702,142.73 to HMRC on account of
an estimated ten-year charge.
1
(b)On 29 August 2013, the Trustee delivered a IHT100 form to HMRC in
respect of the ten-year charge which included a revision to its estimated figures
reducing the IHT due to £1,682,336 and interest of £2,212.
(c) On 16 November 2013, HMRC issued a calculation of IHT in respect of
the ten-year charge in the sum of £1,680,658.59 and interest of £2,066.38. The
notes in the calculation of IHT stated “Provisional Calculation”. HMRC did not
refund the overpayment of £19,417.76 made by the Trustee.
(d)On 25 September 2014, the Trustee made a repayment request in respect of
the sum previously paid (“the disputed tax”).
(10)The Trustees later made two capital distributions in respect of which HMRC have
determined that, contrary to the appellant’s stance, IHT is due:
(a) On 25 September 2014 a capital distribution was made from the Trust to
the Settlor consistingof the proceeds of the sale of the A shares.On 20 May
2015, the Trustee, acting through Smith & Williamson (“SW”), wrote to HMRC
enclosing a nil IHT100 return for this capital distribution. This was accompanied
by the repayment request referred to above.
(b)On 31 January 2017 a further capital distribution was made out of the Trust
to the Settlor in the form of shares, cash and a loan consisting of the proceeds of
the sale of the A shares. On 28 July 2017 SW sent a further IHT100 in relation to
this distribution made which again showed no IHT as due.
I refer to thesedistributionsas“thecapitaldistributions”.Broadly,theissueis
whether IHT is due on these capital distributions under provisions in the settlements
regime which impose a charge to IHT when “relevant property” ceases to be
comprised in a “settlement”.
Repayment notice
3.In outline, in one of the notices of determination (“the repayment notice”), HMRC
have denied the appellant’s claim for repayment of the disputed tax. The appellant made the
claim (a) under s 241 which provides that: “If it is proved to the satisfaction of the Board that
too much tax has been paid” in respect of the relevant taxable event, “the Board shall repay
the excess”, (b) on the basis that the appellant wrongly paid the disputed sum on the correct
interpretation of the following provisions in the settlements regime:
(1)Section 64(1) provides that “where immediately before a ten-year anniversary all
or any part of the property comprised in a settlement is relevant property, tax shall be
charged at therate applicable undersections66 and 67below on thevalue of the
propertyorpart at that time”.Forthispurpose(i)a“tenyearanniversary”isthe
“anniversary of the date on which the settlement commenced and subsequent
anniversaries at ten-yearly intervals” (s 61), and (ii) “references to the commencement
of a settlement are references to the time when property first becomes comprised in it”
(s 60).
(2)“Relevant property” isdefined for the purposes of these provisions as “settled
property in which no qualifying interest in possession subsists, other than…excluded
property” (s 58(1)(f)) and “excluded property” is defined under s 48(3)(c) as follows:
“Where property comprised in a settlement is situated outside the United
Kingdom-
(a)the property (but not a reversionary interest in the property) is excluded
property unless the settlor was domiciled in the United Kingdom at the time the
settlement was made,…” (Emphasis added.)
The dispute relates to the meaning of the highlighted wording.
2
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