In Lexgreen Services Limited v HMRC [2025] TC09618, the First Tier Tribunal (FTT) found that a company had a ‘life’ for Inheritance Tax (IHT) purposes. This meant that the company was liable to pay IHT arising on a non-resident trust’s ten-year anniversary, as the trust's settlor.
Lexgreen Services Limited (Lexgreen) was Incorporated on 20 May 1996. In September 2005, it signed a Trust deed drafted by Baxendale Walker Solicitors, establishing the Lexgreen Services Limited Remuneration Trust (the trust), of which it was named as ‘the Founder’, settling £100.
- A company with a Jersey address was named as trustee.
- Lexgreen subsequently settled further sums into the trust, totalling £6,525,000.
- The trust’s first Ten-year anniversary occurred on 28 September 2015, resulting in an Inheritance Tax (IHT) charge of £155,466.
- On 22 December 2020, HMRC issued a ‘Notice of Determination’ which concluded that Lexgreen was liable to pay the ten-year IHT liability, as the trust's settlor.
- Following a Statutory review which upheld HMRC's decision, Lexgreen Appealed to the First Tier Tribunal (FTT).
Section 201(1)(d) of the Inheritance Tax Act 1984 provides that the settlor of settled property is liable for the tax on a chargeable transfer, where the transfer is made during the ‘life’ of the settlor, and the trustees of the settlement are not UK resident.
- Lexgreen, as settlor, argued that being a corporate entity, it did not have a ‘life’.
- As such, Lexgreen contended that the IHT due could not be collected from it as settlor, because the transfer was not made during its life.
The FTT found that:
- A company that has made contributions to a trust can be liable for IHT arising on the ten-year anniversary of that trust under s.201(d), if it is a live company at the time of the transfer.
- It was perfectly possible, and in keeping with the ordinary meaning of the words, to interpret the phrase ‘during the life of the settlor’ as meaning ‘at a time when the settlor is a live company’.
- There was no basis for the suggestion that the word ‘life’ can only mean human life.
- S.201 is intended to determine who bears liability for IHT. It would be surprising if the draftsperson had intended to create a wide exclusion for corporate settlors without expressly stating it.
- A UK company which has been incorporated and remains on the register of companies would seem to be live.
- Lexgreen was ‘live’ when the ten-year anniversary charge arose on 28 September 2015 and therefore liable to pay the IHT.
- Lexgreen was incorporated on 20 May 1996 and continued to have ‘active’ status on Companies House as of 15 April 2025. This meant it was 'live' on 28 September 2015.
The appeal was dismissed.
Useful guides on this topic
Trusts & Estates: Ten-year charge reporting requirements
What is the ten-year charge (or principal or periodic charge) and when does it apply?
How to set up a UK trust
What are the tax implications of setting up a trust? What do I need to do as a settlor? What do the trustees need to do?
Disguised remuneration loan charge
What is disguised remuneration? What is the loan charge? When does the loan charge apply? Will the loan charge affect me?
Non-resident trusts
When is a trust non-resident? What are the UK tax implications of a non-resident trust? What are the UK tax implications for any beneficiaries? What are the UK administrative requirements for a non-resident trust?
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