As a CFO who’s navigated decades of tax scrutiny, I’ve seen how seemingly noble acts like political donations can turn into IHT nightmares. Two fresh First-tier Tribunal (FTT) decisions from April 2026—Jeremy Hosking v HMRC [2026] UKFTT 406 (TC) and Jonathan Wood v HMRC [2026] UKFTT 589 (TC)—strip away illusions. High-net-worth individuals poured millions into Brexit campaigns, only for HMRC to hit them with IHT bills exceeding £350k and £100k respectively. These aren’t abstract rulings; they’re a playbook for any business leader eyeing political giving.
Both cases zero in on donations to Leave EU groups like Vote Leave Ltd, Labour Leave, Brexit Express, and Brexit Party. Total stakes: £1.7m (Hosking) and £747k (Wood). Tribunals dismissed exemptions under s21 (normal expenditure out of income) and s10 (no gratuitous benefit), plus Hosking’s ECHR human rights twist. Practical? Absolutely—for CFOs balancing philanthropy, politics, and estate planning.
The ‘Normal Expenditure’ Myth Busted
Section 21 IHTA 1984 promises exemption if gifts are ‘normal expenditure’ from income, leaving surplus for your lifestyle. Sounds straightforward? Tribunals say no. Drawing from Bennett v IRC [1995], they demand a settled pattern: either a firm commitment/resolution or a sequence revealing regularity.
Hosking donated sporadically—£1k to £825k, no formula, tied to campaign needs and cash flow. Common theme (Leave EU)? Not enough. FTT: ‘Varying amounts need a quantifiable standard; predictability in timing and quantum is key.’ Wood’s nine hits followed suit: ad hoc, responsive to asks from trusted operatives like Lord Elliott.
CFO Angle: Track donations meticulously. Fixed % of income? Annual quotas per cause? Document the ‘why’ and ‘how much’ upfront. Without it, HMRC pounces post-mortem.
Gratuitous Benefit: Influence Isn’t Value
Wood tried s10: ‘Arm’s length, no gratuitous intent— I got influence!’ FTT, citing Parry v HMRC [2020] UKSC 35, split objective/subjective tests. Objectively? Funds handed over gratis, no enforceable rights. Subjectively? Wood sought sway (daily Boris calls), but still conferred benefit—recipients got full control.
Key: Dual intent doesn’t save you. Even if influence was prime motive, gratuitous upside kills it. Tribunals: ‘No goods/services swapped; campaigns ran independently.’
CFO Angle: Want tax-free political play? Structure as service contracts—consulting fees for strategy input, not donations. Or via companies for corp tax deductibility.
Human Rights Won’t Save Non-Party Gifts
Hosking argued s24 (political party exemption) breaches ECHR (A1P1+Art14, Art10) by favoring established parties. FTT, per Banks v HMRC [2021], found no political opinion discrimination—exemption hinges on party status, not donor views. Obiter: Justified anyway.
CFO Angle: Stick to registered parties for s24. Campaign groups? Risky. Lobby via trade bodies (deductible) or PACs with strings.
Broader Tribunal Echoes: HMRC Procedural Wins
Contrast with Carbon Six Engineering [2026] UKFTT 177—HMRC barred for ‘shambolic’ failures. But here, they prevailed on merits. AccountingWeb notes HMRC’s discovery discipline in similar cases.
CFO Playbook: Mitigate IHT on Advocacy Spend
1. Pattern-Proof Gifts: Donor-Advised Funds (DAF/CAF) with annual quotas. Document intent/resolution years ahead.
2. Commercialize Influence: Fee-for-service via your firm—deductible, no IHT.
3. Life Insurance Wrapper: Offset potential liability.
4. Pre-Empt HMRC: Voluntary disclosure on ‘political’ gifts over £10k.
5. PE Twist: Portfolio cos donating via trading subsidiaries.
HMRC’s IHT Manual IHTM04071 flags political risks. Tribunals reinforce: Intent matters, but proof rules.
Need Tailored Advice?
Tanous has steered PE firms and family offices through IHT minefields for 30 years. Email mark@tanous.co.uk for a no-obligation review. Protect your legacy—before tribunals do.