Inland Revenue v. Lord Lyell [1917] ScotLR 151 (12 December 1917)

Inland Revenue v. Lord Lyell [1917] ScotLR 151 (12 December 1917)

The transaction did not constitute a grant of a new annuity for full consideration in money or money's worth; it was a substitution of security for an existing annuity. The benefit to the defender was not money or money's worth but release from trust administration, which does not qualify for exemption. The cesser of the annuity on the death of the annuitant constituted property passing on death for estate duty purposes, and neither s.3(1) of the Finance Act 1894 nor s.15(1) of the Finance Act 1896 applied.

Citation
[1917] ScotLR 151
Parties
Pursuer (respondent): Commissioners of Inland Revenue; Defender (reclaimer): Lord Lyell of Kinnordy
Jurisdiction
Scotland
Judgment Date
12 December 1917
Procedural Posture
Exchequer Cause (revenue/estate Duty) / Appeal (reclaiming Motion) From Lord Ordinary to Inner House, First Division
Outcome
Appeal dismissed; judgment for the Crown.
Legal Topics
Estate Duty, Annuities, Finance Act 1894, Finance Act 1896, Passing of Property on Death, Consideration in Money or Money's Worth
Revenue Law Succession Law Estate Duty Annuities Finance Act 1894 Finance Act 1896 Passing of Property on Death Consideration in Money or Money's Worth

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Parties

Commissioners of Inland Revenue

Pursuer (respondent)

Lord Lyell of Kinnordy

Defender (reclaimer)

Procedural Posture

Exchequer Cause (revenue/estate Duty) / Appeal (reclaiming Motion) From Lord Ordinary to Inner House, First Division

Legal Issues

  1. 1 Whether the cesser of an annuity on the death of the annuitant constituted property passing on death for estate duty purposes under the Finance Act 1894, s.2(1)(b).
  2. 2 Whether the transaction substituting security for the annuity qualified for exemption under s.3(1) of the Finance Act 1894 (full consideration in money or money's worth).
  3. 3 Whether the exemption in s.15(1) of the Finance Act 1896 applied to the transaction.

Ratio Decidendi

The transaction did not constitute a grant of a new annuity for full consideration in money or money's worth; it was a substitution of security for an existing annuity. The benefit to the defender was not money or money's worth but release from trust administration, which does not qualify for exemption. The cesser of the annuity on the death of the annuitant constituted property passing on death for estate duty purposes, and neither s.3(1) of the Finance Act 1894 nor s.15(1) of the Finance Act 1896 applied.

Court Disposition

Appeal dismissed; judgment for the Crown.

Orders

  • Defender ordained to deliver an account of the property passing on the death of Mrs Katharine Murray Horner or Lyell for estate duty purposes.
  • Remitted to the Lord Ordinary to proceed.