(1)Mark Buzzoni(Executor of the estate of Mrs Lia Kamhi, deceased)(2)The Legis Trust Limited(3)Vili Hayin (or Hayati) Kamhi(4)Cefi Kamhi v Commissioners for Her Majesty's Revenue and Customs
Decision date: 21 April 2011
Neutral citation: [2011] UKFTT 267 (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 appeal concerned whether a future underlease granted by Mrs Kamhi to a trust in 1997 (to commence in 2007) amounted to a disposition subject to a reservation of benefit under s102 IHTA and so formed part of her estate. The Tribunal held the disposition occurred on the grant date (21 November 1997), and that covenants reserving payment (an amount equal to the headlease service charge) and repair liabilities were reserved benefits to Mrs Kamhi. The appellant's challenge was dismissed and HMRC's determinations were upheld.
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
The disposition of a future underlease for inheritance tax purposes occurs on the date of grant, not on the later date when the lease term commences; and covenants reserved to the donor (including obligations by the donee to pay sums to the donor or to underwrite the donor's liabilities), even if not labelled as "rent", can amount to a reservation of benefit under s102 IHTA such that the donee does not enjoy the property to the entire or virtually entire exclusion of the donor.
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 (obiter) that a donor might in principle avoid reservation of benefit by assigning the lease instead of granting an underlease, or by obtaining superior landlord consent for an underlease without reserved covenants. It also rejected a purposive argument that mirror covenants should be ignored because they are imposed by superior landlords, emphasising the statutory test turns on whether a benefit exists.