Lexgreen Services Limited v The Commissioners for HMRC

For inheritance tax on settled property under the special charging provisions in Part III of the Inheritance Tax Act 1984, section 2(3) deems references to a chargeable transfer and its making to include the tax-charge occasion and its occurrence. The individual-transfer requirement in section 2(1) therefore does not prevent a periodic charge arising where the settlor is a company. A corporate settlor can fall within section 201(1)(d): in context, its life can mean the period during which it exists. The liability is a limited recovery mechanism where trustees are non-resident and tax remains unpaid; the statute does not restrict it to individual settlors.

Lexgreen Services Limited established a trust in 2005 whose trustees were resident in Jersey. In 2020, HMRC determined that Lexgreen was liable for inheritance tax on a ten-year periodic charge relating to the trust. HMRC upheld the determination on statutory review, and the First-tier Tribunal (Tax Chamber) dismissed Lexgreen’s appeal in a decision issued on 21 August 2025.

Lexgreen appealed on the question whether a corporate settlor can be liable under section 201(1)(d) of the Inheritance Tax Act 1984, which applies where a transfer is made during the settlor’s life and the trustees are not resident in the United Kingdom.

1. The appeal was dismissed. The Upper Tribunal held that section 201(1)(d) applies to a settlor that is a body corporate.
2. The argument that inheritance tax could arise only from a transfer made by an individual was rejected. Sections 2(3) and 3(4) of the Inheritance Tax Act 1984 make references to chargeable transfers, their making and values transferred include the specified Chapter III Part III tax-charge occasions, their occurrence and the amounts taxed. A periodic charge is treated as a chargeable transfer even though no person need have made an actual transfer. Section 2(1)’s individual-transfer requirement therefore governs the main charging provisions, not the special charging provisions for the periodic charge. Sections 199 and 200 concern liability under the main provisions; section 201 assigns liability for Part III charges.
3. The statutory context did not make “life” an individual-only concept. Section 44(1) defines a settlor by reference to any person, and section 5 and Schedule 1 paragraph 1 of the Interpretation Act 1978 provide that person includes a body corporate unless a contrary intention appears. The ordinary meaning of life can describe either a natural person’s life or the duration of a company’s existence. The Tribunal noted judicial examples of that usage in In re A Company (No 00314 of 1989), Ex p Estate Acquisition and Development Ltd [1991] BCLC 154 and In re Peveril Gold Mines Ltd [1898] 1 Ch 122.
4. Reading sections 201 and 204 together, the settlor’s liability is a secondary recovery mechanism. Under section 204(6)(b), a person other than a trustee is liable only where the tax remains unpaid after it ought to have been paid. The provision protects collection where trustees are outside the United Kingdom. Neither section 201(4), which refers to more than one person as settlor, nor section 204(6), which refers to a person liable for tax, indicates an intention to exclude companies.
5. The close-company provisions in Part IV address transfers of value under the main charging provisions and do not determine liability for special charges. The Tribunal also rejected the inference that the 2025 amendment to section 272 was necessary to include corporate settlors: the accompanying Explanatory Note described it as clarifying existing law, and the Tribunal took that explanation at face value.

1. Upper Tribunal (Tax and Chancery Chamber) — [2026] UKUT 289 (TCC) . Appeal dismissed.
2. First-tier Tribunal (Tax Chamber) — Decision issued on 21 August 2025; appeal dismissed. No citation for that decision is stated in the judgment.