Cornish estate linked to former PM William Wyndham saved after £1.2m inheritance tax blunder

A historic Cornish estate belonging to the family of Britain’s abolitionist prime minister has been saved from a £1.2 million inheritance tax bill following a High Court ruling.

The Fortescue family successfully challenged a “mistake” that threatened the future of their ancestral home.

The family are direct descendants of the nephew of Lord Grenville, William Wyndham, the Whig prime minister credited with ending the British slave trade in 1807.

Their family residence, Boconnoc Manor in Cornwall, has a unique history, achieved through the sale of a £60 million diamond that later adorned Napoleon’s sword.

In 2000, current matriarch Elizabeth Fortescue and her late husband Anthony embarked on an ambitious 12-year, multimillion-pound project to restore the main mansion. Their goal was to preserve the property for future generations and transform it into a luxury wedding venue.

But these plans faced a “terrible blow” after Anthony’s death in 2015. In a bid to minimize inheritance tax, Elizabeth made a “mistake” by transferring to her daughter Claire a lifetime interest in properties held in family trusts, worth approximately £4.4 million.

The mistake left the family, described as “property rich but cash poor”, facing the prospect of breaking up the century-old estate by selling off their holdings to meet a £1.2 million tax claim.

A High Court judge granted permission to reverse the process, allowing the aristocratic family to avoid the “serious and undesirable tax consequences” of the mistake.

The Grade II-listed Boconnoc House was built in the 18th century, starting in 1721, by former Governor of Madras Thomas “Diamond” Pitt, using proceeds from the sale of a giant Indian diamond stolen from a murdered slave before being purchased by Pitt.

Known as the “Pitt Diamond” or “Regent’s Diamond”, the diamond is a stone of more than 140 carats set in the crossguard of Napoleon’s sword and is currently on display in the Louvre, valued at £60 million.

Thomas Pitt’s great-granddaughter and heiress, Anne Pitt – cousin of William Pitt the Younger – later married William Wyndham, Lord Grenville, famous for abolishing the slave trade as prime minister.

On his death in 1864 the estate was inherited by George Matthew Fortescue, son of Lord Grenville’s sister Hester, and it has remained in the Fortescue family ever since.

The land surrounding the River Lerryn contains the largest landscaped deer park in Cornwall and is the home of Boconnoc Cricket Club.

The current generation’s matriarch, Elizabeth Fortescue, inherited a lifetime interest in the trusts in which the family property was held after the death of her husband Anthony, and after taking advice in 2017, she sought to transfer her share of the £4.4 million estate holdings to one of her daughters, Claire, avoiding any inheritance tax as long as Elizabeth survived for a further seven years.

But the court heard that although correct tax planning advice was given at the outset, there were errors in the process he actually followed.

Oliver Conolly, Ms Fortescue’s barrister, told Deputy Joanna Lampert: “This was clearly a mistake. [a] There was a conscious thought process that this was an exempt transfer and he was clearly wrong.

“This can in no way be considered artificial tax avoidance. This is clearly a vanilla tax cut gone wrong.”

“This is a property that has long been in the family. Elizabeth and her late husband devoted a huge amount of time and effort to restoring the historic building and placing it on a solid foundation. The restoration of the main mansion took 12 years.

“This is not a foundation floating in cash.

“Elizabeth was the one who made the mistake. Had she known the impact, she would never have done it.”

Saying that the £1.2 million bill threatened the future of the property, the lawyer told the judge that “the trusts will have to sell the properties to pay the £1.2 million tax”.

He described it as “a terrible blow to confidence”.

Accepting Elizabeth’s claim, the judge said the error created an “unintended tax consequence”.

“To Elizabeth, if she abandons her interest, [the trusts] potentially exempt [from IHT] “Seven years later,” he said.

“It appears that the advice was correct, but the process used to implement it was both wrong and unnecessary.

“He believed that no IHT would be payable on freed property provided he survived for seven years. This belief turned out to be wrong. Instead they led to a 20 per cent tax cut.”

He said the error, which led to a tax liability of £1.2 million including VAT, was “particularly serious because the estate had been carefully arranged with the aim of creating a lasting legacy”.

“It would be difficult for the estate to meet the IHT bill while protecting its future,” the judge said, concluding that it would be “unreasonable” not to correct the error.

“I will order the cancellation of the discharges and the invalidation of the promotions,” he said.

Claire Fortescue, who was among the defendants in the case along with the trustees of the family foundations, did not object to the orders requested by Elizabeth.