Ingram and Another v Commissioners of Inland Revenue

JurisdictionEngland & Wales
Judgment Date17 May 1995
Date17 May 1995
CourtChancery Division

Chancery Division

Before Mr Justice Ferris

Ingram and Another
Inland Revenue Commissioners

Inheritance tax - avoidance scheme - transfer of property by grant of lease

Property transfer avoids inheritance tax

A scheme designed to avoid inheritance tax liability by divesting the owner of land of her sole beneficial ownership of the freehold by the purported grant of leases achieved its purpose.

Although the leases were invalid and unenforceable, the equitable interests that were created and which entitled her to remain in occupation up to the time of her death, did not require the land to be treated under section 102 of the Finance Act 1986 as being property to which she was entitled immediately before her death.

Mr Justice Ferris so held in the Chancery Division in a reserved judgment allowing an appeal by Mr Michael Warren Ingram and Mr C D Palmer-Tomkinson, the executors of the estate of Lady Jane Ingram, deceased, against a determination by the Inland Revenue Commissioners in respect of inheritance tax payable on certain assets on the death of Lady Ingram on February 3, 1989.

Mr Robert Venables, QC and Mr Robert Grierson for the executors; Mr Edward Nugee, QC and Mr Michael Furness for the Crown.

MR JUSTICE FERRIS said that in 1987 Lady Ingram had owned property in Berkshire that she desired to settle on trustees for the benefit of her family while incurring the minimum of adverse fiscal consequences.

On March 29, 1987, she transferred the property to her solicitor, who on the same day executed two declarations that he held the property as nominee for Lady Ingram. By two leases dated March 30 and 31, 1987, 20-year, rent-free leasehold interests in the land were purportedly granted to Lady Ingram and on March 31 the land subject to the leases was transferred to trustees to hold on specified trusts for the benefit of certain beneficiaries.

It was envisaged that by carrying out the transaction in that way that:

(a) an effective settlement would be established without incurring liability to any stamp duty;

(b) the interest taken by Lady Ingram under the leases would have been created in her favour before she had made any gift to the beneficiaries of the settlement;

(c) the disposition in favour of the beneficiaries would be a potentially exempt transfer for the purposes of the Inheritance Tax Act 1984, as renamed by section 100 of the Finance Act 1986;

(d) if Lady Ingram survived for seven years after March 31, 1987, the disposition...

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4 cases
  • Michael Warren Ingram and Others (Appellants v The Commissioners of Inland Revenue (Respondents
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 28 Julio 1997
    ...any application after the replacement of that duty by capital transfer tax in 1975. 4 The decision of Mr Justice Ferris is reported at [1995] 4 All ER 334. Since it is essential to a decision of the appeal that the nature and effect of the transactions should be carefully analysed, I will ......
  • Ingram and Another v Commissioners of Inland Revenue
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 29 Julio 1997
    ...of transferorFinance Act 1986 article 102Finance Act 1986, s. 102(1)(b) This was an appeal by the Revenue from a decision of Ferris J ([1995] BTC 8010) in favour of the executors of Lady Ingram allowing an appeal against a determination to inheritance tax. The determination was made on the ......
  • Ingram and Another v Commissioners of Inland Revenue
    • United Kingdom
    • House of Lords
    • 10 Diciembre 1998
    ...purportedly granted by Mr. MacFadyen to Lady Ingram were a nullity. But he rejected the second part of the argument and he stated [1995] S.T.C. 564, 580D: "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 Prope......
  • National Westminster Bank Plc v Jones and Others
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 24 Octubre 2001
    ... ... In December 1998 another creditor began bankruptcy proceedings against Mr Jones ... ...

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