The High Court is attempting to disentangle a complex family trust case. In Rogge v Rogge wealthy parents put millions into a trust for their young son who became severely disabled as a result of a Polo accident. As trustees they spent £15 million on buying and improving a country house in Hampshire to make it suitable for them to live in to care for their son.
They later discovered that the transfers could lead to heavy IHT charges in the future. They are applying to have the transfers set aside on the grounds of trustee mistake, not having realised that:
- the gift with reservation of benefit rules would apply (keeping the £15million in their taxable estates) because they had gifted the money but then they shared use of the property; and
- a 40% IHT charge would arise on the death of their son,
- There were several other tax mistakes.
Sometimes taxpayers must simply suffer the consequences of their mistakes, or might be able to sue their advisors, depending on the scope of the advice. However, in other, limited, instances it is possible for the court to reverse the steps and help the family avoid the tax – which is what will happen in this, rather sad, situation.
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