IHT, CGT and interests in possession

Both IHT and CGT have special and specific rules for dealing with property held in trust. Not surprisingly these probably work best in the most straightforward cases, where there is a formal trust instrument, such as a Deed or will, which clearly identify a ‘settlor’, the trustees, the trust property and of course the trusts upon which it is to be held. Trusts can, however be created informally, and may be implied from the circumstances. Are there, however, circumstances where the existence of a trust may be implied for IHT purposes, but not for CGT purposes, and, if so does it matter? Consider the following situation: