Islander’s will dispute secures Jersey’s constitutional position

Monday 21 October 2019

A dispute over whether money set aside in an islander’s will to buy a field and build homes for the elderly should be liable to UK inheritance tax has ended up securing “Jersey’s constitutional and international interests”, the Attorney General has said.

Last week, the UK Supreme Court decided after 12 years of courtroom battles that £600,000 could be invested in Jersey, rather than going to the UK taxman.

Jersey resident Beryl Coulter, who passed away in 2007, had wished for part of her £1.8million estate to be put into a trust and used to buy a field and to help construct homes for elderly residents in St Ouen, or donated to Jersey Hospice.

The executors of Mrs Coulter’s will had hoped that the charitable donations from her UK assets would be exempt from UK inheritance tax, but HMRC said that the relief did not apply to gifts to entities outside of the UK.

Pictured: Lady Hale, President of the UK Supreme Court. (PA)

In the end, the country’s top legal minds found against HMRC in a decision welcomed by St. Ouen parish officials.

While the primary concern of the trustees bringing the case against HMRC was carrying out Ms Coulter’s last wishes, the Attorney General has now explained how the case inadvertently ended up having important implications for Jersey’s status as a ‘third country’, able to enjoy the free movement of capital.

HMRC had argued that Jersey’s constitutional relationship with the UK meant that movements should be seen as ‘internal’, while the island’s Attorney General, Robert MacRae QC, said that Jersey should be recognised as a ‘third country’ and therefore enjoy the benefit.

He appeared before the Supreme Court to argue the point, which will have important implications for the island post-Brexit, reinforcing its long-standing privileges, and ensuring it enjoys the same rights as other international finance centres. 

Pictured: The decision protects the island's freedoms at a time when the UK is on the brink of leaving the EU.

The judgment concluded that: “In the present case it is clear that, as the EU rules on free movement of capital do not apply in Jersey, Jersey is to be considered a third country for the purposes of a transfer of capital from the United Kingdom. Capital has moved from a member state where Article 56 applies to a territory where it does not and that cannot be considered a purely internal situation.” 

Following the decision, the Attorney General commented: “I welcome this highly significant judgment which supports our decision to intervene to secure Jersey’s constitutional and international interests in the face of flawed arguments as to Jersey’s proper status.”