Afsha Chugtai v The Commissioners for HMRC
Decision date: 24 April 2025
Neutral citation: [2025] UKFTT 458 (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 two trusts created by the deceased in 2000 (a Henley Road property trust and a Santander account trust) were gifts with reservation of benefit for inheritance tax. The tribunal found that during the seven years before death the deceased continued to occupy and enjoy the trust property and to obtain benefits from the trust account (occupation without market rent; use of the shop and receipt of rent; payments from the account towards property outgoings and some personal expenses). The tribunal dismissed the appellant’s appeal and treated the trust assets as part of the chargeable estate, leaving a separate valuation issue for Henley Road open.
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
Where a donor, after settling assets into trust, in practice continues to occupy trust land without paying market-value consideration and continues to receive or use income or payments from trust assets, those facts support a finding that the donor reserved benefit under the Gifts with Reservation of Benefit provisions; similarly, payments from a trust account that relieve the donor of personal outgoings or meet personal expenses can amount to a non-de minimis benefit showing the donor was not excluded from enjoyment.
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 suggested that the donor’s motive for occupying property (for example, to care for a vulnerable beneficiary) is not decisive under the statutory GROB test, which focuses on what occurred in practice; and that exclusion clauses in trust instruments may be ineffective for IHT purposes if the donor nonetheless continues to enjoy benefits in practice.