Court agrees to rectify deed of variation because of IHT consequences

The usual decision that a deed of variation cannot be rectified if the only mistake was in its tax consequences has been successfully challenged in the case of Ashcroft v Barnsdale [2010] EWHC 1948 (Ch). Previously, rectification was only allowed if the drafter of the Deed made a mistake about its legal effect, a view deriving from the 1990 judgement in Gibbon v Mitchell.
In Ashcroft, the application was brought by a husband acting as his wife's executor. A deed of variation was executed to save inheritance tax, but important wording was missing from the deed resulting in the grossing-up provisions of s.38 of the IHTA1984 coming in to play. Extra IHT was payable, but if the deed had been drafted correctly this would not have arisen. To avoid this extra IHT charge the executor executed a deed of rectification. It was not contested by any other beneficiary, but HMRC refused to accept it without a court order. The High Court granted the application to alter the deed, deciding that the mistake amounted to a different legal consequence of the deed, not just a different tax consequence.
The judge compared the position to a voluntary settlement where "it is clear that there is jurisdiction to order rectification if there is cogent proof of a relevant mistake on the part of the settlor notwithstanding the absence of proof of any mistake on the part of any of the trustees".