In V Hood v HMRC [2017] UKUT 276 (7 July 2017) the UT found that the grant of a sub-lease by way of gift with maintenance and repair covenants which mirrored the covenants owed by the grantor under the head-lease was a gift with reservation of benefit for inheritance tax purposes (FA 1986 s 102).
V Hood was the executor of the estate of his mother Lady D Hood. Lady Hood had granted a sub-lease as a gift to her three sons. HMRC considered that the creation of the sub-lease was a gift subject to a reservation; and that it therefore fell to be treated as property to which Lady Hood was beneficially entitled immediately before her death so that the premises formed part of her estate and were subject to inheritance tax.
The issue was whether the terms of the sub-lease conferred on Lady Hood...
