The restriction in the inheritance tax exemption for legacies and gifts, to legacies and gifts to UK charities which are subject to the supervision of the UK courts, was held not to violate the EU law principle of freedom of movement of capital so as not to be enforceable in relation to a legacy to a Jersey charity.  

The deceased died on 9 October 2007. Her will provided for a charitable gift to a trust established under and governed by Jersey law. HM Revenue and Customs (HMRC) determined that the gift to the trust did not fall within the inheritance tax (IHT) exemption for legacies and gifts to charities (IHTA 1984, s 23), on the basis that as the trust was governed by Jersey law, it did not qualify as a trust for charitable purposes only (within s 23(6)). The High Court ([2014] EWHC 3010 (Ch)) dismissed the appellants’ appeal. 

The Court of Appeal ([2014] EWCA Civ 938) also upheld HMRC’s.