In the matter of the K Trust [2017] JRC 177 (25 October 2017)

In the matter of the K Trust [2017] JRC 177 (25 October 2017)

The representor made a serious mistake in believing that transfers from his UK bank account to the K Trust would not incur UK Inheritance Tax. He would not have made the transfers but for this mistake. The mistake was sufficiently serious and it was just to set aside the transfers, as no third parties would be prejudiced and the beneficiaries supported the application.

Citation
[2017] JRC 177
Parties
Applicant: The Representor; Trustee: B Trust Company Limited; Beneficiaries: K Trust beneficiaries (wife and two children); Notified Party: HMRC
Jurisdiction
Jersey
Judgment Date
25 October 2017
Procedural Posture
Trust Law Application / Judgment on Application to Set Aside Transfers
Outcome
Application granted; transfers set aside ab initio.
Legal Topics
Mistake in Trust Law, Voidable Transfers, Inheritance Tax Liability, Article 47 E Trusts (jersey) Law 1984
Trusts Equity Taxation Mistake in Trust Law Voidable Transfers Inheritance Tax Liability Article 47 E Trusts (jersey) Law 1984

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Parties

The Representor

Applicant

B Trust Company Limited

Trustee

K Trust beneficiaries (wife and two children)

Beneficiaries

HMRC

Notified Party

Procedural Posture

Trust Law Application / Judgment on Application to Set Aside Transfers

Legal Issues

  1. 1 Whether the representor made a mistake in relation to transfers to the K Trust under Article 47E of the Trusts (Jersey) Law 1984
  2. 2 Whether the mistake was sufficiently serious to justify setting aside the transfers
  3. 3 Whether it was just to make a declaration voiding the transfers

Ratio Decidendi

The representor made a serious mistake in believing that transfers from his UK bank account to the K Trust would not incur UK Inheritance Tax. He would not have made the transfers but for this mistake. The mistake was sufficiently serious and it was just to set aside the transfers, as no third parties would be prejudiced and the beneficiaries supported the application.

Court Disposition

Application granted; transfers set aside ab initio.

Orders

  • Transfers by the representor into the K Trust declared void ab initio under Article 47E of the Trusts (Jersey) Law 1984.
  • Further consequential orders made.