Annette Tonkin v The Commissioners for HMRC

Annette Tonkin v The Commissioners for HMRC

Section 94(2)(a) of the Inheritance Tax Act 1984 applies to prevent an apportionment being made to the Appellant under s 94(1) because the payment to her was subject to income tax and thus falls within the statutory exemption; therefore, no inheritance tax charge arises on the Appellant in respect of the scheme.

Parties
Appellant: Annette Tonkin; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
20 June 2025
Procedural Posture
Tax Appeal / First Tier Tribunal Judgment
Outcome
Appeal allowed
Legal Topics
Inheritance Tax, Employee Benefit Trusts, Tax Avoidance Schemes, PAYE, National Insurance Contributions, Close Companies
Tax Law Inheritance Tax Employee Benefit Trusts Tax Avoidance Schemes PAYE National Insurance Contributions Close Companies

Case Brief

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Parties

Annette Tonkin

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Judgment

Legal Issues

  1. 1 Whether an additional charge to inheritance tax under IHTA 1984, s 94 applies to the Appellant as a participator in a close company following a failed employee benefit trust scheme
  2. 2 Whether IHTA 1984, s 94(2)(a) prevents apportionment where the payment is subject to income tax
  3. 3 Whether IHTA 1984, s 12 prevents there being a transfer of value

Ratio Decidendi

Section 94(2)(a) of the Inheritance Tax Act 1984 applies to prevent an apportionment being made to the Appellant under s 94(1) because the payment to her was subject to income tax and thus falls within the statutory exemption; therefore, no inheritance tax charge arises on the Appellant in respect of the scheme.

Court Disposition

Appeal allowed

Orders

  • The notice of determination imposing an inheritance tax charge of £83,020 plus interest is set aside.