Viscount Hood, executor of the estate of Lady Diana Hood (TC4858)
Gift with reservation of benefit
Lady Hood was the lessee of a lease (the head lease) of premises in London. In 1997 the property was sub-let to her sons. She died in March 2008. HMRC said the sub-lease was a gift with reservation of benefit (FA 1986, s 102) and was liable to inheritance tax. The executor appealed.
The First-tier Tribunal said that, after the decision of the Court of Appeal in Buzzoni v CRC [2014] 1 WLR 3040, the focus was not on whether the donor had obtained a benefit from the gifted property, but whether the donees’ enjoyment of that property was exclusive. The tribunal found that the sub-lease to the sons was subject to obligations under positive covenants, which had represented a benefit to the deceased. The gift therefore constituted one with reservation of benefit.
The taxpayer’s appeal was dismissed.
