In Viscount Hood, executor of the estate of Lady Diana Hood v HMRC [2016] T04858 an IHT avoidance scheme in granting a reversionary lease failed: the lease was a gift with reservation of benefit (GWR).

• The 1979 estate planning involved the gift of a sub-lease of a London property by Lady Hood to her three sons.
• The sub-lease provided for an indemnity from the sub-lessees for the performance of the donor’s duties for repair of the property etc.
• Lady Hood died in 2008.

The First Tier Tribunal (FTT) decided, following the decision of the Court of Appeal in Buzzoni v HMRC [2013] , that as the sub-lessees were unable to enjoy their lease to the exclusion of Lady Hood there was a GWR by the donor, her house therefore remained in her estate for IHT purposes.

This has now been confirmed by the Upper Tribunal.

Comment

FA 1986 brought most reversionary lease planning to an end. This case tests the second leg of that legisation: section 102(1)(b). 

Link

Viscount Hood, executor of the estate of Lady Diana Hood v HMRC [2016] T04858

Viscount Hood as executor of the estate of Lady Diana Hood v HMRC [2017] UKUT 0276 (TCC)

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