Overseas Chambers of Peter Harris

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Jersey, JE2 7ZW

54. French usufruits and their continued misstreatment by HMRC even after the Court of Appeal Judgment in Barclay's Wealth

November 13th 2020

As there is apparently litigation afoot in relation to French Usufruits and s.43(2) ITA 1984, I have prepared a short commentary on the recent unanimous decision of the Court of appeal in Barclay's Wealth in which the scope of s.43(2) can be said to have been restricted to trust and not to outcomes.

HMRC have had to settle my "pré-contentieux" on these issues, so if this helps anyone else  involved  in an issue, with HMRC on this point please do not hesitate to contact me for specific advice, aprticularly if your adviser seems out of their depth in the middle of the definitions on either side of the Channel. A Frehc lawyer is unlille to e fmailar with a trust let allone asettklemeht, an dan Englsh lawyer is probaly not used to rhe treatment of civil law concepts and the manner in which the English Courts, not HMRC,  have treated them historicaly. Ther are certain principles that have not been and cannot be overtaken or overruled by HMRC.

This is certainly not the only point against HMRC's view, but it shows I hope that the Inheritance Tax Act 1984 has been overextended by them to cover foreign dispositions that were not within the scope of its Chapter III on settlements, and that Parliament cannot be construed as having intended these to be taxed as settlements on the wording which it used.

Please enjoy the reading: French usufruits and HMRC's attempt to deem settlements