IHT meets the ECHR

Posted On: 23 October 2007

Author: Scott Blair

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Burden and Burden v. United Kingdom  (2006) 21 BHRC 640, [2007] STC 252, 9 ITLR 535, [2007] WTLR 607 is about whether siblings who live together all their lives should have inheritance tax relief as with married couples and civil partnerships.

The sisters have spent their lives in a stable, committed, supportive and loving relationship with each other. Neither Applicant has ever married. One was born in 1918 the other in 1925.

The case poses a sharp and major challenge to the traditional "hands off" approach to discrimination claims in the tax field. As the case is about IHT it is of particular importance to trust and executry practitioners as well as tax lawyers.  

Because they are sisters, they cannot enter into a "Civil Partnership" under the Civil Partnership Act 2004. Parrt III of that Act extends the concept of civil partnership to Scotland.

Their complaint, heard by a Grand  Chamber of the European Court of Human Rights on 12th September 2007, relates to the fact that they will have to pay a significant amount of inheritance tax when the first sister dies and leaves her estate to the other sister.

Under the Inheritance Tax Act 1984 , IHT that was charged at 40 per cent on the value of a person's property insofar as in excess of £285,000 for relevant transfers during the tax year 2006-2007 and £300,000 for 2007-2008.

Section 18(1) of the 1984 Act provided that property passing from the deceased to his or her spouse was exempt. With effect from December 5, 2005, that exemption was extended to a deceased civil partner, a category introduced under the 2004 Civil Partnership Act for same-sex couples, which did not cover family members living together.

Their complaint is that it is unfair that they have to pay this tax, when married couples or partners under the Civil Partnership Act are granted an exemption.

An attempt by the House of Lords to insert an amendment into the legislation including family members over the age of thirty who have lived together for more than 12 years within the exemption was rejected by the House of Commons.

They claimed that this was a violation of their right to peaceful enjoyment of their possessions, under Article 14 of the EHCR, taken in conjunction with Article 1 of the First Protocol.

(Continued. For full article please download using link at the top of the page.)