Commentary

I2.207 Countess Fitzwilliam v IRC

IHT, trusts and estates

I2.207 Countess Fitzwilliam v IRC

I2.207 Countess Fitzwilliam v IRC

The Revenue made an unsuccessful attempt to apply the Ramsay principle in the inheritance tax case of Countess Fitzwilliam v IRC1. This was the only case in which the House of Lords considered the Ramsay principle in relation to a series of transactions aimed at saving CTT or IHT.

A series of steps was taken to mitigate CTT in relation to a substantial estate of a deceased person who had left a will containing two–year discretionary trusts with IHTA 1984, s 144 (see I4.431–I4.435) in mind. The series of transactions involved appointments out of the estate, and various gifts and settlements by the widow (Lady Fitzwilliam) and her daughter (Lady Hastings). By careful use of s 144, the spouse exemption (see I3.332), the reverter to settlor exemption (see I5.252) and the (now abolished) mutual gifts exemption (see I3.721–I3.724), substantial property ended up in the hands of Lady Hastings at a minimal CTT cost if the scheme worked. The main issue was whether the evidence showed that there was a

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