In brief: Jersey’s Royal Court has unwound a £17.3 million trust after a retired banking professional received incorrect advice about her UK domicile status. The error, made by her legal adviser, left her facing inheritance-tax liabilities of more than £4 million, plus interest and further charges. The Bailiff declared the trust invalid and set aside the transfers, ruling that refusing relief would be “quite unjust.”
The Mistake That Cost Millions
In April 2018, a 70-year-old retired banking professional established the Jersey-based Puffin Trust, transferring cash and other assets worth approximately £17.3 million into it. Her intention, Bailiwick Express reports, was straightforward: to protect her wealth from unnecessary tax exposure and to pass it on to her two daughters and, in time, her grandchildren. A perfectly sensible plan, one might think. Unfortunately, the foundations were built on sand.
The woman, who is anonymised in the judgment, had moved to London with her husband in 1983. The couple lived abroad between September 2000 and September 2005, before eventually retiring in England. She relied on Stephen Green, a partner at law firm Wiggin Osborne Fullerlove, for advice on her domicile status. Mr Green told her she would not become deemed UK-domiciled until April 2020, giving her a window in which to establish an offshore trust and benefit from her existing tax position.
There was, however, a rather significant problem. Mr Green had failed to account for her years of UK residence before 2000, despite being aware of that history and holding a comprehensive note of it. The woman had in fact become deemed UK-domiciled in April 2017, a full year before the trust was created. The court was blunt in its assessment: “The advice she received was simply wrong.”
The Bill Arrives
The error lay undiscovered for years. It was only in December 2025, while Mr Green was preparing inheritance-tax filings, that the miscalculation came to light. By that point, the consequences were severe.
The resulting liabilities included an initial inheritance-tax charge of approximately £4.245 million, plus interest of £1.63 million accrued by July 2026, with potential penalties on top. Beyond that, there were further inheritance-tax consequences and significant income-tax and capital-gains-tax charges amounting to £2.2 million, again with possible interest and penalties.
The woman told the court: “These consequences were not merely unexpected but wholly inconsistent with the advice I had received and the careful and entirely standard planning I believed I was implementing when I established the Trust.” The court accepted her account entirely, finding that she would not have entered into the arrangement had she known the true position.
Crucially, the judgment was careful to note the nature of the planning involved. “This was not an aggressive tax mitigation strategy but rather a straightforward plan to take advantage of her supposed domicile,” it stated. In other words, this was not a case of someone pushing the boundaries of the law; it was a case of someone acting in good faith on professional advice that turned out to be incorrect.
The Court’s Decision
The Bailiff, Sir Robert MacRae, sitting with Jurats Powell and Le Heuzè, concluded that the trust should be declared invalid and the transfers set aside. In practical terms, this means the assets are treated as having always been held directly by the woman herself, rather than through the trust structure.
The court confirmed that no inheritance tax will now be due on the arrangement, though Bailiwick Express notes that some adverse income-tax and capital-gains-tax consequences remain. HMRC confirmed it would adhere to the court’s order. The woman’s family supported the application throughout, and the court also confirmed that £16,000 previously distributed to charities could remain with them.
For Jersey’s trust and legal services industry, the case is a pointed reminder of the precision required in domicile calculations, particularly where clients have complex residential histories spanning multiple countries and decades. A single overlooked period of UK residence, despite being clearly documented, proved enough to unravel an entire structure and generate a tax liability running to several million pounds.
Source: Bailiwick Express
