In a recent dispute over his late father’s estate, appellant Sharas Changizi was left not only empty-handed but owing over £100,000 in inheritance tax and legal fees after a 15 year long battle with his family. The High Court confirmed that Changizi’s entire £300,000 share had been wiped out, leaving him with a further debt of £102,000 to the estate. 

The case stemmed from a long-running feud following the death of Mr Changizi Sr. in 2010. Whilst Changizi’s siblings had redirected their shares to their mother via a deed of variation, making themselves and their mother exempt from inheritance tax as the spouse of the deceased, Changizi himself refused. He then argued that the inheritance tax burden of £282,000 for his share should be shared across the entire estate, and his family were forced to pay the bill.

The decision

The court disagreed that the tax liability should be shared, citing section 41 of the Inheritance Tax Act 1984, which prevents tax from falling on exempt beneficiaries such as spouses. As the only non-exempt beneficiary, Changizi was held solely liable.

The judgment also addressed a £300,000 payment Changizi had received from his father in 2009. Though Changizi later claimed it was a debt settlement, the court found that he had consistently referred to it as a gift, making it a failed potentially exempt transfer (PET) and therefore subject to inheritance tax. The executors had paid the tax and interest on his behalf, further increasing his liability.

The court dismissed Changizi’s appeal against this, finding that his claims were “abusive or hopeless” and stating that he had failed to provide a full picture of his finances. His attempt to argue that his mother’s share should also bear tax was rejected, with the judge affirming that the tax burden must fall entirely on the non-exempt beneficiary.

This case is a stark warning about the importance of understanding tax implications in estate planning, and the financial consequences of challenging them without clear legal footing.