Court Agrees to Rectify Deed of Variation Because of IHT Consequence


A man who created a deed of variation to his late wife’s will that led to adverse Inheritance Tax (IHT) consequences found the High Court sympathetic recently when he applied to have the variation revoked.
Normally, such rectifications are allowed if the mistake is regarding the legal effect of the variation, not the tax consequences alone.
When the mistake was realised, the man sought an order for rectification of the variation. This was opposed by HM Revenue and Customs (HMRC).
The High Court decided that the mistake did not merely create a tax consequence, but created a different legal consequence from that which was intended. It therefore upheld the man’s application for rectification.
Says <<CONTACT DETAILS>>, “HMRC often oppose applications which have the effect of reducing tax payable. It is always better to make sure that any documents which have a tax implication are thoroughly vetted before they are executed.”
Partner Note
Ashcroft v Barnsdale [2010] EWHC 1948 (Ch).

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