Elderly sisters lose European appeal against inheritance tax liability

29/04/2008

Two elderly unmarried sisters who appealed against a ruling by the European Court of Human Rights (ECHR) that they should be liable for inheritance tax when the first of them dies have lost their appeal.

Joyce Burden, 89, and her sister Sybil, 82, of Marlborough, Wiltshire, have lived together for their entire lives and cared for four relatives. They inherited the house they currently share from their father, and have lived there for the last 30-odd years.

"We are still struggling to understand why two single sisters in their old age, whose only crime was to choose to stay single and look after their parents and two aunts to the end, should find themselves in such a position in the United Kingdom in the 21st century," they said.

They have made wills expressing their intention that the first of them to die will leave her entire estate to the other sister. However, as matters stood under UK law, on the first death there would be an inheritance tax liability equating to 40 per cent of the value of that sister’s share of jointly-owned and other property exceeding £312,000 for the 2008/2009 tax year.

If they were married or able to enter into a civil partnership, there would have been an exemption to paying any inheritance tax on the first death. However, siblings are prevented by law from entering into a civil partnership, and so the surviving sister would have been faced a heavy inheritance bill. The sisters had complained to the ECHR that this effectively amounted to discrimination.

The ECHR held a hearing on 12 September 2006 and released its Judgment on 12 December 2006. The sisters had lost their substantive claim that they should be entitled to the same exemption as a married or civil partnership couple by a margin of three votes to four. The EHCR was also asked to consider other points, including whether they were victims in accordance with the European Convention on Human Rights, whether they had exhausted all domestic remedies and whether they were out of time to bring their application.

The Court found in favour of the sisters on each of these points.

The sisters were granted permission to appeal, and the Appeal Hearing before the Grand Chamber of the ECHR took place on 12 September 2007, in front of 17 judges, all of different nationalities. The President of the Court invited the parties to submit written observations on several questions, including:

Given that liability to inheritance tax will not arise until one of the sisters dies, can they currently claim to be victims of any violation of the European Convention?
Have the sisters done all that can be required of them to exhaust legal remedies in the UK?

Is the fact that the surviving sister will be liable to pay Inheritance Tax on her dead sister’s half of their shared property compatible with Article 14 on the Convention, given that the survivor of a marriage or Civil Partnership would not be liable?

The Judgement of the Grand Chamber issued today found by a majority of 15 to two that because the sisters’ relationship was of a different nature to that of married couples and homosexual partners they had not suffered discrimination and there was no violation of the convention.  

The Judgement stated:

“The absence of … a legally binding agreement between the applicants renders their relationship of co-habitation, despite its long duration, fundamentally different to that of a married or civil partnership couple.”

However, the judges ruled on an important point for UK law, in finding that the sisters were right to go straight to the European Court of Human Rights, agreeing that a declaration of incompatibility by the English Court was not an effective remedy.  This means that others wishing to pursue a claim in the ECHR will no longer need to take their claim through the UK courts first.

Statement on behalf of the Misses Joyce and Sybil Burden

First of all, we would like to thank our QC, David Pannick, our barrister, Sam Grodzinski, and our lawyers, Thring Townsend Lee & Pembertons, for all the help they have given us. We would also like to thank all the people from around the country for all their lovely letters. It was wonderful to have all that support during such a stressful time.

We are still struggling to understand why two single sisters in their old age, whose only crime was to choose to stay single and look after their parents and two aunts to the end, should find themselves in such a position in the United Kingdom in the 21st century.

We certainly do not regret our decision to look after our family for a single moment; we were glad to repay them for the happy, good Christian upbringing they gave us.

But we have been fighting for 32 years just to gain the same rights, as regards inheritance tax, as married couples and now couples in Civil Partnerships.  As the Civil Partnership Act was going through Parliament, the House of Lords submitted an amendment allowing the Act to extend to siblings who have lived together for more than 12 years to take advantage of Inheritance Tax law, but these were rejected by the House of Commons.

So, having always paid our taxes, and having cared for our relatives and each other when necessary without any help from the state, we are now in the worrying and upsetting position of being unable to secure each other in our last few years.

Our brothers fought in the Second World War, and our sister was a nurse throughout the Blitz. We do not believe that this is the sort of freedom and democracy that they envisaged when they put their lives on the line for their country.

It is not an exaggeration that we feel as if we have been personally persecuted.

We are, of course, bitterly disappointed at the result.

This is a day we hoped that we, as British citizens, would never see.

Mature Times says:

In all probability, the EHCR has interpreted the law as it stands correctly. In which case, in the immortal words of Charles Dickens, “If the law supposes that,” said Mr. Bumble,… “the law is a ass—a idiot. And the worst I wish the law is that his eye may be opened by experience—by experience."

The law is not just there to raise money from British Citizens. It is here to uphold what the morals and ethos of our nation hold to be just and fair. This law is a bad law and needs to be changed.  So which political party is going to pin its colours to the mast and promise to get this changed - and then follow through on its promise?