Viscount Hood Executor of the Estate of Lady Diana Hood v The Commissioners For Her Majesty's Revenue & Customs, TC 04858
| Jurisdiction | UK Non-devolved |
| Judge | Roger BERNER |
| Judgment Date | 02 February 2016 |
| Neutral Citation | [2016] UKFTT 059 (TC) |
| Respondent | The Commissioners For Her Majesty's Revenue & Customs |
| Appellant | Viscount Hood Executor of the Estate of Lady Diana Hood |
| Reference | TC 04858 |
| Court | First-tier Tribunal (Tax Chamber) |
TC04858
Appeal number:TC/2014/04688
INHERITANCE TAX – 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
FIRST-TIER TRIBUNAL
TAX CHAMBER
VISCOUNT HOOD
EXECUTOR OF THE ESTATE OF LADY DIANA HOOD
Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE ROGER BERNER
Sitting in public at The Royal Courts of Justice, Strand, London WC2 on 12 and
13 January 2016
Simon Taube QC, instructed by Penningtons Manches LLP, for the Appellant
Jonathan Davey, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2016
2
DECISION
1. The estate of the late Lady Diana Hood appeals against a determination of
HMRC dated 13 June 2014 in respect of a deemed transfer of value for the purposes 5 of inheritance tax (“IHT”) on the death of Lady Hood on 15 March 2008.
2. The notice of determination related to the grant on 19 June 1997 by Lady Hood
to her three sons of a sub-lease (“the Sub-Lease”) of premises at 67 and 67a Chelsea
Square, London SW3 (“the property”). That Sub-Lease was granted out of a lease
(“the Head Lease”) dated 21 September 1979 of which Lady Hood was the lessee. 10
3. The determination was as follows:
A. [H]aving regard to the provisions of section 102 Finance Act 1986
the creation of the Sub-Lease was a disposal by way of gift by the
Deceased of property subject to a reservation which falls to be
treated as property to which she was beneficially entitled 15 immediately before her death.
B. As transferee and executor you are liable for inheritance tax on the
property subject to the reservation having regard to s.200(1)(a) and
s.200(1)(c) of the Inheritance Tax Act 1984.
The facts 20
4. Although I heard some witness evidence, to which I shall refer below, there was
essentially no dispute as to the facts.
5. At her death Lady Hood was entitled to the Head Lease of the property. That
lease was, as I have referred above, dated 21 September 1979 and was made between
(i) Viscount Chelsea (“the head lessor”), (ii) the Chelsea Land & Investment 25 Company Limited, (“Chelsea Land”), (iii) Cadogan Holdings Company (“Cadogan”)
and (iv) Lady Hood. It was for a term expiring on 25 December 2076.
6. The Head Lease contained unexceptional provisions and covenants, including to
pay rent and to repair. In relation to assignment and sub-letting the Head Lease
included a covenant by the lessee (clause 2(18)): 30
“(a) NOT to assign transfer underlet or part with possession of part
only of the demised premises
(b) NOT without the previous consent in writing of the Company
[Cadogan] such consent not to be unreasonably withheld to assign
transfer or part with possession of the demised premises as a whole 35 (except by way of mortgage or charge) …”
7. The Head Lease also included a right for the lessor to forfeit the Head Lease in
the following terms (clause 4(B)):
“If the rent hereby reserved or any part thereof shall be unpaid for
twenty one days after becoming payable (whether formally demanded 40
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