I3.407 GWR—Gifts of an interest in land
An original principle of the GWR provisions is that where a donor makes a gift of part of property but retains an interest in another part, it is not a gift with reservation. The interest retained is simply something which was not included in the gift. See I3.401A. This principle can be applied to gifts where the whole interest is divided, for example, a gift of part of a share portfolio or part of an art collection. (Vertical division) It can also be applied where the whole interest in the property is divided into different types of entitlement, for example, an insurance policy in which the death benefit is given away1, or the gift of a limited interest in chattels. (Horizontal division).
More obviously, a horizontal division of property interests can apply to interests in land: a freehold interest can be made subject to a lease; a leasehold interest can be deferred. The potential to carve out separate interests in land challenges the rationale of the GWR legislation since it is possible to enjoy all of the benefits of occupation where only a limited interest has been carved out. This challenge (or opportunity) has been the focus of complex avoidance arrangements, the most significant of which was examined in the case of Ingram v IRC2 because it led to an important addition to the original GWR provisions.
This article looks at the principles of the Ingram case and describes the additional provisions which were included