A historic Cornish estate, linked to the family of former Prime Minister William Wyndham, Lord Grenville, has been saved from a substantial inheritance tax bill after a High Court ruling. The Fortescue family successfully challenged a “mistake” that threatened the future of their ancestral home, the Boconnoc Estate.
Background of the Estate
The Boconnoc Estate in Cornwall has a rich history, having been acquired through the sale of a £60m diamond that later adorned Napoleon’s sword. The estate, which includes the Grade-II listed Boconnoc House built in the 18th century, has been in the Fortescue family for generations. The family are direct descendants of a nephew of William Wyndham, the Whig prime minister credited with abolishing the British slave trade in 1807.
The Restoration Project
In 2000, current matriarch Elizabeth Fortescue and her late husband Anthony embarked on an ambitious 12-year, multimillion-pound project to restore the main manor house. Their aim was to preserve the estate for future generations, transforming it into a luxury wedding venue. However, these plans faced a “terrible blow” after Anthony’s death in 2015.
The Tax Blunder
In an attempt to minimise inheritance tax, Elizabeth made a “mistake” by transferring a life interest in estate properties, valued at approximately £4.4m and held in family trusts, to her daughter Claire. This error left the family, described as “property rich but cash poor”, facing the prospect of breaking up the centuries-old estate by selling properties to meet a £1.2m tax demand.
Mrs Fortescue's barrister, Oliver Conolly, told Deputy Master Joanna Lampert: “It's crystal clear this was a clear mistake. This was [a] conscious thought process that this was an exempt transfer and that was clearly mistaken. There's no way in which this can be seen as artificial tax avoidance. This is plain vanilla tax mitigation gone wrong.”
The Court Ruling
A High Court judge has now granted permission to reverse the process, allowing the aristocratic family to avoid the “grave and unintended tax consequences” of the blunder. The judge, allowing Elizabeth's claim, said the mistake had created “an unintended tax consequence.”
“Elizabeth was advised that if she released her interest in [the trusts] it would be potentially exempt [from IHT] after seven years,” she said. “It appears that the advice was right, but that the process used to give effect to it was both wrong and unnecessary. She believed that no IHT would be payable on the released properties provided she survived seven years. That belief proved to be mistaken. Instead, they gave rise to a 20 per cent tax charge.”
The judge noted that the error, which led to a £1.2m tax liability including VAT, was “particularly grave because the estate has been the subject of careful arrangement” in order to create a lasting legacy. “It would be difficult for the estate to meet the IHT bill whilst protecting the future of the estate,” said the judge, concluding that it would be “unconscionable” for the error not to be rectified.
Historical Significance
The Boconnoc Estate has a fascinating history. Grade-II listed Boconnoc House was built in the 18th century, beginning in 1721 by Thomas “Diamond” Pitt, ex-Governor of Madras, using the proceeds of sale of a giant Indian diamond, which was originally stolen from a murdered slave before being bought by Pitt. The diamond, known as the “Pitt Diamond” or “Regent Diamond”, is a 140 carat-plus stone that ended up mounted in the crossguard of Napoleon's sword and is now on display in the Louvre, valued at £60m.
Thomas Pitt's great great granddaughter and heir Anne Pitt – a cousin of William Pitt the Younger – later married William Wyndham, Lord Grenville, who as prime minister was famous for abolishing the slave trade. On her death in 1864, the estate was bequeathed to George Matthew Fortescue, the son of Lord Grenville’s sister, Hester, and it has remained in the Fortescue family ever since.
The estate, surrounding the River Lerryn, includes the largest landscaped deer park in Cornwall and is the home of the Boconnoc Cricket Club.
Future of the Estate
With the court ruling, the estate is now secure. Claire Fortescue, who along with the trustees of the family trusts were the defendants in the action, did not oppose the making of the orders sought by Elizabeth. The judge concluded: “I shall make an order that the deeds of release be set aside and that the deeds of advancement are invalid.”
