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MD Freedman v M Freedman, CRC & others, Chancery Division of the High Court
The claimaint placed two properties in a trust for her own benefit. Her father had loaned her the money to buy one of the houses.
A settlement was entered into whereby the loan would be repaid when the first property was sold.
The solicitor failed to appreciate that as a result of rules introduced in the Finance Act 2006 (IHTA 1984 s 49(1A) the transfer of assets into the trust would be a lifetime chargeable transfer for inheritance tax purposes.
He also overlooked the immediate entry charge of 20% to the extent that the net value exceeded the nil rate band and that there would be a ten-yearly charge and exit fees.
The charges would prevent the claimant from repaying her father. She applied for an order to set aside the settlement on the ground of equitable mistake.
HMRC opposed the claim noting Pitt...
