Exemption for gifts to political parties

The taxpayer and his companies made donations to the UK Independence Party (UKIP) in 2014 and 2015. It was accepted that the donations were ‘transfers of value’ within IHTA 1984 s 3. It was also agreed that the transfers of value made by the companies controlled by the taxpayer could be treated as made by him under s 94.

The dispute concerned whether the donations qualified for exemption from inheritance tax under s 24 (gifts to political parties). The provision covers only donations to a political party that at the last election preceding the transfer of value had at least two MPs or one seat and 150 000 votes. At the 2010 general election – the one preceding the date on which the donations were made – UKIP had no MPs. Therefore HMRC said the taxpayer did not qualify for the exemption.

The First-tier Tribunal...