The Upper Tribunal has closed the “companies don’t have a life” escape hatch on secondary inheritance tax liability. In Lexgreen Services Limited v HMRC [2026] UKUT 00289 (TCC), decided 31 July 2026, Judges Thomas Scott and Vimal Tilakapala dismissed the company’s appeal. A corporate settlor can be on the hook under section 201(1)(d) Inheritance Tax Act 1984 when non-UK resident trustees leave a relevant property charge unpaid.
If your group has ever funded an offshore trust, remuneration trust, EBT-style arrangement or any relevant property settlement with non-resident trustees, this is a live balance-sheet and controls issue — not a private-client footnote. Read the full UT decision PDF and the practical read from Macfarlanes. The FTT first-instance decision is Lexgreen [2025] UKFTT 1019 (TC).
What happened
Lexgreen, a UK company, established a remuneration trust in 2005 with Jersey trustees — a Baxendale Walker-promoted structure of the kind many boards will recognise from the mid-2000s. Contributions over time ran to around £6 million. The trust’s ten-year anniversary in 2015 triggered a relevant property charge under section 64 IHTA 1984 of roughly £150,000–£155,000, plus interest. The non-resident trustees did not pay. HMRC pursued the corporate settlor.
Primary liability sits with the trustees under s.201(1)(a). Secondary liability under s.201(1)(d) bites where:
- the chargeable transfer is made during the life of the settlor; and
- the trustees are not for the time being resident in the United Kingdom.
Lexgreen’s defence was pure construction: a company is not “alive” in the ordinary sense, so a transfer cannot be made “during the life of the settlor”. If that were right, corporate settlors of non-resident trusts would fall outside the secondary liability net for anniversary and similar Part III charges.
The Upper Tribunal’s answer
The UT rejected that argument. “Settlor” under section 44 IHTA 1984 is wide enough to include bodies corporate. The Interpretation Act treats “person” as including a body corporate unless a contrary intention appears. Nothing in s.201(1)(d) carves companies out.
On “life”, the tribunal refused the existential rabbit hole. A company that is incorporated and registered is treated as alive — in existence — at the relevant time. As the UT put it in substance: the ordinary meaning of “life of the settlor” is capable of applying to a corporate settlor, and there is no reason Parliament would have limited recovery to individual settlors and thereby increased the risk of non-collection when trustees sit offshore.
A second line of attack — that chargeable transfers under s.2(1) are fundamentally about individuals — also failed. Part III charges (including ten-year anniversary charges) are brought into the chargeable transfer machinery by the special charging rules. You do not get a corporate free pass just because the main lifetime transfer definition talks about individuals.
Outcome: appeal dismissed. Corporate settlor secondary liability stands. The FTT had already dismissed Lexgreen’s appeal on 21 August 2025; the UT has now locked the point of law.
Finance Act 2025 does not make this academic
Parliament has already moved. Finance Act 2025 amended the general interpretation provisions of IHTA so that references to a settlor being “alive” are, for a body corporate, read as references to the body being in existence. The explanatory material treats that as a clarification of existing law. Critically for CFOs, the statutory tidy-up is framed for transfers into trust on or after 6 April 2025. Pre-6 April 2025 settlements — which is where most legacy remuneration trusts, EBTs and offshore relevant property structures sit — still live or die on the Lexgreen analysis. Macfarlanes’ note is clear on that boundary.
So: new settlements get the statute in black and white. Old settlements get the UT. Either way, the corporate settlor is in scope while the company exists and the trustees are non-UK resident.
Why CFOs should care (even if “IHT is private client”)
This is not only a family-office problem. Corporate settlors of non-resident trusts show up across PE holdco stacks, management incentive planning, historical EBT/remuneration trusts, employee benefit arrangements that never fully unwound, and group reorganisations that parked value offshore “temporarily”. When the ten-year clock hits and trustees do not pay, HMRC’s collection route runs straight back to the UK company — and from there into cash, provisions, director attention and, in stressed cases, covenant and warranty territory.
Secondary liability is a collection rule. Trustees remain primarily liable. But if they are offshore, unpaid and uncooperative, the settlor company is the practical defendant. Interest compounds. Determinations arrive years after the commercial people who designed the structure have left. Audit committees then discover an IHT debt sitting next to PAYE/NIC and disguised remuneration risk on the same historic arrangement.
Lead-case status matters. The FTT treated the construction point as a Rule 18 lead issue. Stayed cases on the same point should now expect the same answer unless facts cleanly distinguish them. If you have a live enquiry or a stayed appeal on corporate settlor “life”, assume the law has moved against you.
The CFO controls cut
Do this in the next two board cycles if it is not already done:
- Inventory every settlement the group (or a group company) has settled or funded. Include remuneration trusts, EBTs, family/hybrid structures with corporate settlors, and any non-resident trustee arrangement still on the books. Map settlor entity, trustee residence, contribution history, ten-year anniversary dates and exit-charge risk under s.64/s.65.
- Flag unpaid or unassessed anniversary charges. Lexgreen’s bill was “only” ~£150k on ~£6m of contributions. Scale that across larger historic funding and interest, and the number stops being a rounding error. Check whether trustees have filed, paid, or gone dark.
- Stop treating corporate dissolution as a free exit. While the company exists, secondary liability can attach. Striking off a dormant settlor company without clearing trust IHT is how quiet problems become personal-liability and restoration fights later.
- Align tax, legal and pensions/HR files. Many of these structures sit across three silos. The PAYE/NIC and loan-charge story may already be known; the IHT secondary liability story often is not. One schedule, one owner, one board update.
- On PE deals, put this in tax DD and SPA mechanics. Ask: any corporate settlor? Non-resident trustees? Anniversary dates in the locked-box period or within warranty survival? Specific indemnity for unpaid relevant property IHT and related interest. Do not rely on a generic “tax paid” warranty if the trustees, not the target, were meant to pay.
- For new planning, assume s.201(1)(d) reaches the company. If you need non-resident trustees, price the secondary liability, funding mechanics and information rights explicitly. “The trustees will pay” is not a control.
How this sits with the wider HMRC collection agenda
Lexgreen is a construction case, but it fits a broader pattern: HMRC will use every statutory collection route when the person with the money is outside easy reach. That same mindset shows up in debt strategy and payment-method reform — including the open consultation on requiring VAT and PAYE return liabilities by Direct Debit (closes 16 August 2026; see also ICAEW’s summary). Different tax heads, same theme: close the gap between liability and cash.
For outbound contact and digital default, HMRC’s modernising digital outbound communications programme is rolling under the wider transformation roadmap. Determinations, reviews and follow-up will increasingly land in digital accounts first. If your group’s agent authorisations, email contacts and trust-case owners are stale, you will hear about secondary IHT later than you should.
What not to over-read
Three caveats keep this honest:
- Facts still matter. Trustee residence under s.201(5), multiple-settlor splits under s.201(4), and the unpaid-tax gateway under the liability code all remain live. Lexgreen answers the corporate “life” point; it does not invent liability where the statutory conditions fail.
- Amounts and interest are case-specific. Use the decision for principle, not as a ready-reckoner for your own anniversary charge.
- Historic promoter structures carry stacked risk. IHT secondary liability can sit beside employment tax, corporation tax deduction and governance issues on the same trust. Fix the map before you fix one tax head in isolation.
Bottom line
The Upper Tribunal has confirmed what HMRC needed for collection: a UK company that settles a trust with non-resident trustees can be secondarily liable for relevant property charges arising while the company exists. “Companies don’t have lives” is not a defence. Finance Act 2025 locks the point for new settlements; Lexgreen covers the legacy book.
If you have corporate settlors and offshore trustees, build the inventory, diary the anniversary dates, and put unpaid trust IHT on the same risk register as employment-tax legacy schemes. That is the CFO cut — cash, controls and clean DD — not a seminar on the meaning of life.
Sources: UT decision page; UT PDF; FTT judgment; Macfarlanes; IHTA s.201; IHTA s.44; IHTA s.64; Law360 report; Direct Debit consultation; ICAEW; HMRC digital outbound communications.