Commentary

I3.134 Rectification or recission of dispositions for IHT

IHT, trusts and estates

I3.134 Rectification or recission of dispositions for IHT

I3.134 Rectification or recission of dispositions for IHT

Mistakes in a voluntary deed or instrument can be rectified (or set aside completely — 'recission') by the court, and where such rectification is granted it is retroactive, so that the deed or instrument is deemed to have taken effect from the date of its execution in its rectified form2.

This is accepted by HMRC, who will, however, not accept an out of court instrument of rectification made by the persons interested in the matter as having any retroactive effect. For HMRC's view on rectified instruments having retrospective force, see Lake v Lake 3.

An out of court instrument of rectification is not only not retroactive, but making such an instrument can have the effect of eliminating any issue capable of being contested between the parties, with the consequence that the parties can no longer obtain a rectification order from the court. They can thus no longer obtain the rectification with retroactive effect for tax purposes which they might have been able to obtain if they had not made the instrument4.

Case law

Rectification may be obtained if it is proved that the intention of the donor or settlor at the time of executing the deed was other than that manifested by the deed5.

On the other hand, establishing that a mistake was made is not necessarily enough to found a claim for rectification. The decision of the Court of Appeal in Whiteside v Whiteside6 presents an obstacle for some claims for

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