Gregor Hogan reports on the lessons from Viscount Hood v HMRC & what constitutes a gift with reservation of benefit
- The judgment is a reminder that this area of law remains complex and particularly sensitive to the facts of each case.
- Practitioners should remain careful when using precedents to consider how changes may affect the legal position.
In Viscount Hood v HMRC [2018] EWCA Civ 2405 the Court of Appeal considered the extensive case law on s 102(1)(b) of the Finance Act 1986, ie gifts with reservations, where a revisionary long sub-lease had been granted subject to positive covenants. It provides a useful overview of the authorities but should also prompt practitioners to give careful consideration to whether any steps can be taken to mitigate the tax consequences of such impugned schemes.
Background
The factual background was, for the Court of Appeal’s purposes, rather simple. Lady Hood owned a 97-year lease (the headlease) of 67 and 67A Chelsea Square (the property). The headlease contained a number of usual covenants, for example to repair and maintain and to paint the exterior of the property every
