Our expert solicitors have successfully ended a 12-year battle to fulfil a generous woman’s last wish to make a charitable donation. Mrs Beryl Coulter died in 2007 and in her will left her UK estate to a Jersey trust to build homes for the elderly.
Under UK law, charitable donations are exempt from inheritance tax. However, as the trust was in a non-EU country and not in the UK, HMRC claimed that inheritance tax would have to be paid. This would have significantly reduced the size of Mrs Coulter’s donation.
How We Helped
Having appealed rulings in the High Court and Court of Appeal, the Jersey trust contacted our solicitors to fight the case further in the Supreme Court.
The Supreme Court considered two key issues. The first, whether Jersey was a third country under the EU’s core principle that there should be no barriers to freedom of movement of capital. The second issue, if it was a third country, if HMRC’s interpretation of the inheritance tax rules was justified.
Anthony Nixon, Partner at Irwin Mitchell, said: “The executors of Mrs Coulter’s will challenged their liability for inheritance tax, because they believed that it constituted an unlawful and unjustifiable restriction on the free movement of capital between European Union member states and third countries, and that Jersey was a third country for these purposes.
“The Jersey Government supported our argument. Mrs Coulter lived in Jersey and we considered that the inheritance tax exemption for trusts that are clearly charitable should apply in Jersey as it does in the UK.”
The Supreme Court supported the Court of Appeal’s ruling that Jersey was a third country and that the principle of free movement must be applied. It also found that HMRC’s decision to charge inheritance tax of nearly £600,000 was not justified. They agreed it wasn’t right as Mrs Coulter’s gift was completely charitable and intended for a good cause.
Anthony Nixon said:
“HMRC has for many years interpreted the charity exemption for a gift to a trust for charitable purposes as requiring the trust to be subject to the jurisdiction of the UK courts. The Supreme Court has confirmed our view that HMRC were wrong.”
“So, after a long fight, Mrs Coulter’s estate is free of tax and can all be used for the elderly in her Jersey parish, exactly as she wished. We are grateful to the judges for hearing our clients’ case and pleased that they have now ruled in our favour.”
If you’re a beneficiary or an executor of a Will and feel that HMRC has calculated inheritance tax incorrectly, our Will, Trust & Estate disputes solicitors may be able to help. Call us today on 0370 1500 100 or contact us online to find out more.
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