Ronald Michael Harris (as trustee of the Harris Family Charitable Trust) v Commissioners for Her Majesty's Revenue and Customs
Decision date: 18 August 2010
Neutral citation: [2010] UKFTT 385 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerned whether legacies redirected by a deed of variation to a family charitable trust qualified as "qualifying donations" under s 25 Finance Act 1990, where the deed produced an inheritance tax (IHT) exemption. The Tribunal held that, for income tax purposes, the deed did not erase the fact that an IHT liability had arisen on death and was subsequently removed, and that removal of that liability was a benefit received by the donors in consequence of making the gifts. Because that benefit exceeded the statutory de minimis limits, the gifts were not qualifying donations and the appeal was dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
For income tax purposes the s 142 IHTA deeming provision is confined to IHT and does not alter the factual position for other taxes; a putative IHT liability that arose on death and was later removed by a deed of variation can amount to a benefit to the donor "in consequence of" making the gift under s 25(2)(e) FA 1990, so such gifts may fail to be qualifying donations where the benefit exceeds the de minimis limits. Also, "the making of the gift" may be construed to include the whole process and arrangements (e.g. a deed of variation), not merely the final payment.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal noted that Parliamentary materials and Inland Revenue press releases about the gift aid scheme were of limited assistance to statutory construction. It also drew a distinction between lifetime gifts (where no IHT liability ever arises) and post-death deeds of variation (where an IHT liability arose and was later removed), which affects whether a benefit can be said to have been received.