Pilot’s daughter stands to lose her home over row about father’s death

http://www.theguardian.com/money/2015/jan/03/inheritance-tax-row-with-mod

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Was Lieutenant James Patrick killed during “warlike” service, or did his death occur during a “routine” training exercise? Almost 50 years after the jet he was flying exploded in mid-air, a Ministry of Defence ruling that seeks to answer this question once and for all has landed his daughter Serena with a cripplingly high inheritance tax bill that may force her to sell her flat.

She and the MoD are at odds over the interpretation of a tax break that exempts the estates of members of the armed forces from inheritance tax provided certain conditions are met.

The chancellor, George Osborne, recently announced he was extending this exemption to emergency services personnel and aid workers – but when it comes to the case of Patrick, a Royal Navy pilot who served aboard HMS Ark Royal, it seems the MoD won’t budge.

His daughter, a part-time teacher, says this is not just about money. Serena feels the authorities have done her late father a disservice by failing to properly recognise the “incredibly dangerous job” he was doing at a tense time in Britain’s naval history.

Back in 1966, Patrick was a pilot with the Fleet Air Arm and taking part in the so-called Beira Patrol off the coast of Mozambique. Virtually forgotten now but a big deal at the time, the Beira Patrol was a naval blockade intended to choke off oil supplies to Rhodesia (now Zimbabwe), which had illegally declared independence from Britain just a few months earlier.

On the afternoon of 22 March, three weeks after the blockade began, Patrick’s Sea Vixen jet took off from the deck of Ark Royal on a bombing exercise, to practise dropping 500lb high-explosive bombs on targets placed in the sea. But one of the bombs exploded prematurely, apparently because of a problem with a safety pin, instantly killing the 30-year-old and his observer. “All that was found were a few very small pieces of the aircraft and two flying helmets,” according to the letter of sympathy sent to Patrick’s wife Juanita.

Serena, who turned 50 last month, has no memory of her father – she was 15 months old when he died, and only has one photo of him holding her. However, she found herself hit by a “wave of emotion and facts” when, following the death of her mother in February 2013, she was advised to find out if the inheritance tax exemption relating to members of the armed forces might apply to her mother, Juanita’s, estate.

This exemption is granted when an individual dies while serving in the armed forces, provided they were either “on active service against an enemy” or “on other service of a warlike nature, or which, in the opinion of the Treasury, involved the same risks as service of a warlike nature”.

In February 2013, Guardian Money featured the case of Robert Mendoza, whose family successfully claimed the exemption – resulting in an inheritance tax saving of more than £20,000 – after his death in 2012. Mendoza had developed a form of TB while serving on board a navy ship during the second world war, and his family succeeded in making the case that this was a contributory factor in his death 67 years later.

Serena turned detective (and military researcher) and, after investigating the circumstances of her father’s death, applied to the Service Personnel and Veterans Agency (SPVA), the body that decided exemption requests. But it turned her down. In a letter, an SPVA official said Patrick would have been “routinely involved in bombing exercises”, adding that while Ark Royal had been taking part in the Beira Patrol, it was heading towards Singapore when the accident happened.

The letter also said the Beira Patrol “was not categorised as war but as a blockade, and therefore the use of force was not authorised by the United Nations”.

However, Serena says the accident happened at a time when the UN security council was known to be about to turn up the heat on Rhodesia; on 9 April 1966, just 18 days after her father’s death, a security council resolution was passed calling on Britain to use force if necessary to prevent oil shipments getting through. She adds that while the accident occurred during a gap in Ark Royal’s Beira Patrol duties, the aircraft carrier was continuing to take part in the operation, and the bombing exercise was “preparatory to deployment”.

Serena says on top of that, the Sea Vixen was “well-known to be a dangerous aircraft”; her father was one of six Ark Royal Sea Vixen aircrew killed in just 19 months. And she points out that her father’s name is inscribed on the armed forces memorial near Lichfield, Staffordshire, which honours those “killed on duty while performing functions attributable to the special circumstances and requirements of the armed forces, or as a result of terrorist action, and those who died while deployed on designated operations”.

The SPVA’s decision to turn down Serena’s request for an exemption has proved costly for her. Her mother’s estate was valued at £965,000 – well above the inheritance tax threshold of £325,000 – though they weren’t (and aren’t) a wealthy family. This is almost entirely down to the fact that her mother’s house, the estate’s most valuable asset, is located in Putney, south-west London. Juanita bought it for £6,000 in 1969, when Serena was four, but it was valued at probate at £800,000.

As the only child, Serena has had to pay the full inheritance tax bill of £256,000, which has left her “seriously in debt”. If the exemption had been granted, this would have cut the bill to £126,000. “I’ll have to sell my little flat, as I just feel so strongly that I don’t want to sell the house. It was the house I lived in from the age of four, and is where I live now. Why should they take my house?”

She has carried on battling. Her MP, Justine Greening, has raised her case with the MoD, but both the previous and current defence secretary, Philip Hammond and Michael Fallon, have said that because Patrick died on a “training exercise,” the exemption cannot apply.

Serena says: “It seems to have been written off as a training exercise. I just don’t see how what he did had fewer risks, given the context. To me, this feels morally wrong.”

As to what happens now, she says: “I don’t know what else I can do – a judicial review?

“It’s money I don’t have. I’m immensely proud of my father, and this really feels like a lack of recognition for his utter commitment to the defence of this country, and his bravery.”