Spencer Gardner Dickins (SGD), an accountancy practice based in Coventry, UK, has urged high-net-worth individuals to tighten their processes for making and documenting regular gifts.
The call comes after a recent tribunal ruling showed that even substantial donations can still trigger an unexpected inheritance tax (IHT) liability.
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In Hosking versus HMRC, businessman Jeremy Hosking was left facing an IHT bill of £349,309.
SGD Private Client Tax director Matt Stamback said: “There is something quietly tragic about a man who gives away £47.5m to good causes and still ends up with a tax bill.
“The First-tier Tribunal’s decision in the Hosking case is a masterclass in how to lose a perfectly winnable Inheritance Tax appeal through casual record keeping and the mistaken belief that being a generous person is legally the same as being a systematic one.”
The case centred on more than £1.7m in donations made between 2011 and 2016 to Brexit campaign groups.
The dispute focused on whether they qualified as “normal expenditure out of income” under the Inheritance Tax Act 1984, which requires a predictable pattern of giving or a clear, followed-through resolution to make such gifts.
Stamback added: “The gifts were not viewed as a commitment as Mr Hosking could not say when he made any decision, whether it was communicated to anyone, or what its terms were.
“He provided no documentary evidence, no deed of covenant, no letter of intent and no email setting out a plan. The other fatal blow was that the gifts could not be viewed as a pattern because a pattern required predictability.
“Hosking gave when asked, often gave the amount he was asked for, attended charity functions and donated while there and could not explain why he chose any particular amount on any particular occasion.”
On that basis, the tribunal ruled the payments did not amount to “normal expenditure out of income”.
Hosking also claimed he was discriminated against on political grounds, pointing to Section 24 of the Act, which exempts gifts to qualifying political parties such as the Conservatives but not to referendum campaign bodies.
The tribunal rejected that argument, stating that Section 24 distinguishes between qualifying parties and non-party organisations, not between different political opinions.
Stamback added: “Three classic mistakes were made by Hosking. He kept no records, made an assumption about what creates a pattern and chased a creative discrimination argument instead of fixing the basic problem with his Section 21 claim.”
SGD says donors seeking IHT relief should not rely on “good character and vague memory” but keep records and show consistent giving.
