A High Court judge has criticised the RSPCA for demanding that the heirs of a wealthy donor pay the inheritance tax on his gift.
The friends and brother of George Mason, who left the RSPCA more than £480,000 in his will, were taken to court by the animal charity.
However, High Court judge Mr Justice Peter Smith dismissed the claim and ordered the RSPCA to pay the costs of the legal action on an indemnity basis - the highest level that can be awarded, which usually reflects the court’s displeasure.
Had the RSPCA won its case, legacies to George Mason’s friends Norman and Patricia Sharp, who are in their mid-seventies, would have been cut by more than £130,000, and brother John Mason, 85, would have received just £ 28,820.
This comes just a week after the RSPCA was ordered to pay the bulk of £1.3million legal costs after losing a lengthy court battle against Christine Gill, who was disinherited by her mother’s gift to the charity. Judge James Allen QC punished the charity for refusing to negotiate before the case came to court.
George Mason, who died in 2007 aged 75, left £234,000 and his house in Gosport, Hampshire, worth around £169,000, to Mr Sharp, a seaman he had known for 30 years, and his wife.
Mr Mason had also given them £234,000 from his assets and £66,000 to his brother.
The residue of his estate - £482,820 - went to the RSPCA. The charity claimed the £112,667 inheritance tax should come from the other beneficiaries under the terms of the will.
But Mr Justice Smith commented during the hearing that it was “clear” from reading the will that Mr Mason never intended that any tax liability should fall on his brother or friends and should be paid from the remainder of the estate after their legacy had been calculated.
Mr Justice Smith, who is to give his reasons for dismissing the claim in a written ruling in the future, said although the claim was not “frivolous” it was “extremely weak and should not have been brought”.
Keith Gordon, representing John Mason, told the judge after he dismissed the RSPCA’s claim that the charity should pay the legal costs itself rather than from the money it was gifted.
He said: “This was a vexatious attack on the beneficiaries and the claim had absolutely no merit.
“To award costs directly against the RSPCA would give a message to the charity sector generally to learn from this lesson.”
Even though the ruling had gone against the charity, it would still be receiving £370,000 after paying the inheritance tax bill.
Sarah Cooper, an associate at Hodge Jones & Allen LLP, said: “Generally it is presumed that gifts and legacies in a will are to take effect free of tax unless there is an indication to the contrary, meaning that the beneficiary of the residue is responsible for the inheritance tax.” http://www.timesonline.co.uk/tol/money/tax/article7023739.ece