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Ingram v I.R.C. (Court of Appeal) 28 July 1997

Inheritance tax. “Carve-out” leases. Failed implementation.

Lady Ingram had conveyed property to a nominee, who then purported to grant her a lease of 20 year term. The freehold reversion was the subject of a gift to beneficiaries. Lady Ingram then died. Held (Nourse LJ, Evans LJ; Millett LJ dissenting): It was impossible for a person to grant a lease to themselves. The grant of a lease by a bare trustee, or nominee, was similarly impossible. The lease was a nullity. The gift was a gift of the freehold with vacant possession, but subject to an obligation in equity to give Lady Ingram rights and interests as if the lease had been valid. Those rights and interests constituted a reservation of benefit within the meaning of s.102 FA 1986 (Gifts with reservation).