The High Court held that the transfer of a property to the trustees of a settlement could be set aside on the equitable grounds of mistake as to the IHT consequences.
The claimant and first defendant (husband and wife) transferred the title to a substantial house to the claimant alone on 24 March 2006. On 27 March 2006, the claimant settled the house on an interest in possession trust, and transferred title to the house to the trustees of the settlement (i.e. himself and the first defendant).
An unintended consequence of the above transactions (as the result of a change in inheritance tax (IHT) legislation introduced in Finance Act 2006, from 22 March 2006) was that the claimant became liable to a substantial IHT liability on the value of the house, and the trustees became liable to pay IHT on every tenth anniversary of the trust.
The claimant and first defendant were not aware of the IHT changes
