Trusts and Estates

One of the last three years or so trustees, personal representatives and those who advise them will probably feel that they have become all too familiar with the relief under Chapter III of Part VI IHT Act 1984. This allows the sale proceeds of..

• Finance Act 1986, Section 102 and Schedule 20, contains special rules on the taxation of lifetime gifts were the person making the gift (the donor) reserves or receives any material benefit from the gifted asset. These rules are intended to..

It is one of the cardinal features of IHT that if a donor makes a gift, which is a Potentially Exempt Transfer, it will be completely exempt from IHT if the donor survives for seven years.The key question will often be, when does the seven year period start and therefore end? The answer will depend upon the nature of the property being gifted, and the formalities required to transfer ownership. The Special Commissioners had to consider this question in relation to a gift of a cheque in Curnock v IRC SpC 365 (noted 2003 STI 1052).

The recent Court of Appeal decision in CIR v Eversden (2003 STC 822) has focused attention on the occupation rights of joint owners of land, particularly land in the form of a dwelling house. The question in the Eversden case arose in relation to the issue of whether a house owner who disposed of a joint interest while herself retaining a relatively small joint interest had made a gift which was within the IHT reservation of benefit provisions. The tax consequences of creating or gifting joint interests in land, and the taxation of them, will to a great extent depend upon the legal rights, and liabilities attached to the joint interest. Cases which establish and explain these rights and liabilities, when the Courts adjudicate on disputes between joint owners, are therefore of interest to tax advisers as well as property lawyers. Re Byford deceased (the Times 13 March 2003).

When the Revenue appeal in CIR v Eversden 2003 STC 822 was dismissed by the Court of Appeal, the Court acknowledged Revenue protestations that the way was being opened to widespread tax avoidance. Carnwath LJ felt however, that the law was clear and that if a remedy were required, the Revenue would have to seek it from Parliament (See “From the Courts” on p. 4 of the June issue of Trusts and Estates). In “From the Revenue on p5 is the text of a Press Release announcing that a new clause of the Finance Bill is to be tabled, to counter the effect of the Court of Appeal decision.