(1)Mark Buzzoni(Executor of the estate of Mrs Lia Kamhi, deceased)(2)The Legis Trust Limited(3)Vili Hayin (or Hayati) Kamhi(4)Cefi Kamhi v Commissioners for Her Majesty's Revenue and Customs

Facts

Mrs Lia Kamhi held a long lease ("the Headlease") of Flat 32 Parkside, Knightsbridge, granted by Parkside Knightsbridge Ltd on 5 June 1996 for a term of 100 years less one day from 25 March 1994, at a premium of £250,000. On 21 November 1997 the Superior Landlord consented to an underletting, and Mrs Kamhi granted an underlease ("the Underlease") of the flat to Ovalap Nominees Limited, acting as bare nominee for the second Appellant, Legis Trust Limited, for a term of about 86½ years commencing on 24 November 2007 — ten years later — without rent or premium. On the same day she settled the Underlease on trust for her sons, the third and fourth Appellants. The Underlease and the accompanying Licence to Underlet contained covenants mirroring those in the Headlease, including an obligation on the undertenant to pay Mrs Kamhi a sum equal to the service charge payable under the Headlease, and to keep the property in repair. Mrs Kamhi died on 2 May 2008. HMRC issued Notices of Determination on 15 October 2009 that the gift was one with a reservation of benefit, so that the value of the Underlease fell to be treated as part of her estate for inheritance tax. The executor, trustee and beneficiaries appealed to the First-tier Tribunal.