In Parveen Chadda and Others v HMRC  UKFTT 1061, decided on 27 November 2014 the First-tier Tribunal (FTT) found that a married couple, Mr and Mrs Tobin had severed the joint tenancy of their matrimonial home even though the written record of the notice of the severance could not be found.
Thus, property was held as tenants-in-common and a half share passed under the terms of Mr Tobin’s Will into a nil rate band trust rather than to the survivor.
Before the introduction of transferable ‘nil rate bands’ in 2007 the use of nil rate band Will trusts was far more widespread than it is now and, likewise, it is and was always of course sensible to keep a written record and indeed to record a severance at HM Land Registry. The specific result of the case is therefore not terribly exciting.
What is more interesting, however, is what was said by the FTT in reaching its conclusion about the evidence required to establish that the severance had occurred. Although the written record could not be found, there was evidence in the form of a draft notice, a witness statement and the fact that the probate papers on Mr Tobin’s death (some years previously) had been prepared on the basis that a severance had occurred.
HMRC argued that this was not enough and did not meet a minimal evidential standard. The FTT disagreed, holding that:
HMRC’s submission that there is some minimum level of proof required, however probable the event, must be rejected in the light of the comments made both by Lord Hoffmann and Baroness Hale in Re B. I agree with [counsel for the taxpayer] that if something inherently improbable requires strong evidence, it follows that something less improbable requires less evidence.
In this case, as it was probable that the tenancy had been severed, the evidential burden was not so great and the taxpayer was therefore able to satisfy it.
This is a very useful principal to bear in mind when dealing with any HMRC dispute. If a taxpayer is trying to assert something which seems unusual or counterintuitive, it will be reasonable for HMRC to demand a high level of proof. If on the other hand, HMRC is seeking to deny something which one might reasonably assume to have happened, the taxpayer’s evidential burden should be lower.
For further information and help on IHT, please contact the TaxDesk on 0845 4900 509 and ask for Lawrence Adair.
For further information and help in dealing with HMRC enquiries, ask for John Hood.