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Elderly sisters lose ECHR appeal against inheritance tax

Date:29 APR 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 years.

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% 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.

The Judgment 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, there had been no violation of Article 14 (prohibition of discrimination) of the European Convention on Human Rights taken in conjunction with Article 1 of Protocol No. 1 (protection of property) to the Convention. The Judgment 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 ECHR, 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.

Through a statement made on their behalf, Misses Joyce and Sybil Burden said: "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 thestate, we are now in the worrying and upsetting position of being unable to secure each other in our last few years."