Fryer & Ors v Revenue & Customs [2010] UKFTT 87 (TC) (17 February 2010)

Fryer & Ors v Revenue & Customs [2010] UKFTT 87 (TC) (17 February 2010)

Mrs Arnold's omission to exercise her right to take retirement benefits under the pension policy was a deliberate omission within s 3(3) IHTA 1984, resulting in a diminution of her estate and an increase in the value of the discretionary trust. The omission was not exempt under s 10 IHTA 1984 as it was intended to confer a gratuitous benefit. The appropriate valuation of the diminution is the open market value of the right to take the retirement benefits at the date of death, assessed at £89,850.

Citation
[2010] UKFTT 87 (TC)
Parties
Appellants: David Michael Fryer, Tracey Jane Marsh and Jayne Arnold (Personal Representatives of Patricia Arnold deceased); Respondents: The Commissioners for Her Majesty’s Revenue and Customs (Inheritance Tax)
Jurisdiction
United Kingdom
Judgment Date
17 February 2010
Procedural Posture
Inheritance Tax Appeal / First Tier Tribunal (tax), Decision After Hearing
Outcome
Appeal dismissed subject to variation of determination and adjustment of value of diminution.
Legal Topics
Inheritance Tax, Pension Policy Trusts, Dispositions by Omission, Valuation of Estate, Section 3(3) IHTA 1984, Section 10 IHTA 1984
Tax Law Trusts and Estates Inheritance Tax Pension Policy Trusts Dispositions by Omission Valuation of Estate Section 3(3) IHTA 1984 Section 10 IHTA 1984

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Parties

David Michael Fryer, Tracey Jane Marsh and Jayne Arnold (Personal Representatives of Patricia Arnold deceased)

Appellants

The Commissioners for Her Majesty’s Revenue and Customs (Inheritance Tax)

Respondents

Procedural Posture

Inheritance Tax Appeal / First Tier Tribunal (tax), Decision After Hearing

Legal Issues

  1. 1 Whether omission to take retirement benefits under a pension policy constituted a disposition under s 3(3) Inheritance Tax Act 1984
  2. 2 Whether such omission diminished the estate and increased the value of a discretionary trust
  3. 3 Whether the omission was deliberate

Ratio Decidendi

Mrs Arnold's omission to exercise her right to take retirement benefits under the pension policy was a deliberate omission within s 3(3) IHTA 1984, resulting in a diminution of her estate and an increase in the value of the discretionary trust. The omission was not exempt under s 10 IHTA 1984 as it was intended to confer a gratuitous benefit. The appropriate valuation of the diminution is the open market value of the right to take the retirement benefits at the date of death, assessed at £89,850.

Court Disposition

Appeal dismissed subject to variation of determination and adjustment of value of diminution.

Orders

  • Notices of Determination to be varied to reflect that the disposition occurred by omission during lifetime to exercise the right to take retirement benefits, not specifically on the 60th birthday.
  • The diminution in the estate is to be valued at £89,850 as at 30 July 2003.