The Supreme Court is set to review a long-running Inheritance Tax (IHT) case against HM Revenue & Customs (HMRC).
The case, Her Majesty’s Revenue and Customs v Parry & Ors, first went to court five years ago based on the application of IHT on a pension transfer by a woman who died a few weeks later.
Ms Staveley transferred a segment of a pension she had set up with her former husband into a new pension pot, leaving her children as beneficiaries.
However, HMRC classed the pension transfer as a “chargeable lifetime transfer”, and subsequently an “omission to act” because she did not draw any benefits. They then applied Inheritance Tax to the transfer.
The Court of Appeal ruled in HMRC’s favour last year, saying that they were correct to apply IHT, but two previous tribunals had not come to the same conclusion.
HMRC has argued that the two actions, transferring the pension and gifting it to her children, were related in an attempt to reduce the value of her estate. But Ms Staveley’s estate argued that the transfer should be exempt because it was not intended as a “gratuitous benefit”.
The tax treatment of pension transfers by those in ill-health is an ongoing issue, but it is hoped that bringing the case to the Supreme Court will finally deliver some clarity on a dispute which has had no definitive decision as of yet.
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