26th – 27th May 2021
Arron Banks (the Taxpayer) appeals the decision of Mrs J Falk and UTJ Timothy Herrington sitting in the Upper Tribunal (Tax and Chancery Chamber) (UT) dated 1 April 2020 whereby the UT dismissed the Taxpayer’s appeal from the decision of the First tier Tribunal (FTT) dated 15 October 2018.
The FTT dismissed the Taxpayer’s appeal against HMRC’s assessment notice dated 15 February 2017. HMRC decided pursuant to the Inheritance Tax Act 1984 (IHTA) that inheritance tax in the sum of 162,945.34 pounds was chargeable on various donations the Taxpayer made either personally or through companies he controlled between 7 October 2014- 31 March 2015 to the United Kingdom Independence Party (UKIP).
The parties agree the donations constitute “transfers of value” within s3 of IHTA but disagree on whether the donations qualify for exemption from IHT under s24 IHTA (gifts to political parties).. The effect of UKIP’s failure to have any candidates elected as MP in the 2010 general election was that the donations did not meet the conditions for exemption from IHT set out in s24 (a party must have at least 2 MP’s or 1 MP and at least 150,000 votes).
The FTT held the assessment gave rise to breach of the Taxpayer’s Convention rights under Art 14 ECHR read with Art 1 of the First Protocol to the ECHR (1P) but a remedy could not be granted under the Human Rights Act 1988 (HRA).
The UT held s24 did not give rise to direct or indirect discrimination within Art 14 or interfere with freedoms of expression or association protected under Arts 10/11 ECHR so as to require justification by HMRC. The UT expressed obiter views that if there was Art 14 discrimination it was justified and if there was breach of ECHR a conforming interpretation of s24 was not “possible”.