If a parent gifts 50% of their main residence to their child and the child moves in to the main residence at the time of the gift would this still be deeded a gift with reservation if the child pays 50% of the bills and has separate living rooms? and also is there a max percentage that would be acceptable for this approach? thank you in advance for your comments.
FA 1986 s102B, in particular subsection (4), may be relevant.
The gift by the parent of 50% of their interest to their child is in principle a GWR. However subsections (4) provides that the gift is not a GWR assuming the conditions of the subsection are satisfied including that the parent receives no benefit; hence, the need for an expenses split albeit the safer option is for the parent simply to continue to pay all household expenses.
There is no legislative support for a maximum percentage which can be given away although 50% is often cited as acceptable to HMRC; however, there appears to be no reason why a. larger percentage may be given.
Malcolm Finney
The guidance at IHTM14360 is microscopic:
“This provision sets out in statutory form the practice which has already been adopted for transfers of undivided shares of land. It confirms that where, for example, a house is placed by the donor in the joint names of donor and donee, both occupy the property and both share the outgoings, that will not be a GWR”.
It is as if HMRC are saying “we don’t like this stuff and we’re not telling you how we’ll approach it, so there!”
There are questions unanswered in relation to s102B(3):
1 what if the donee ceases to occupy and the donor provides no or less than full consideration to the donee.
What constitutes “occupation” and when does it cease? Are the occupation examples in IHTM14333-5 of any relevance. What is to the “exclusion” of the donee? Is this a factual test or does it mean only after formal steps have been taken under s13 ToLATA 1996? What if consideration starts out as full and becomes less over time or fluctuates? If it is an all or nothing test the reservation extends to the whole of the property given not to a proportion related to the current undervalue and sets running a new 7 year period each time it falls below “full” but a PET is not deemed to occur each time it is topped up to full and the reservation terminates because of s102C(6)…
2 If the trustees are also the equitable owners, and one ceases to occupy but does not seek to activate s13(1) (5) and (6) against the sole occupier, does he make a TOV by omission to exercise a right? And if he does so but the sole occupier refuses to agree to pay for such sole occupation, does the non-occupier make a TOV by omission if he deliberately makes no attempt to enforce those subsections?
Jack Harper
I suspect anyone reading Jack’s post would not begin to contemplate utilising FA 1986 s 102B(3) to escape the GWR provisions. However, my historic experience is that using the section can effectively avoid a GWR arising…
Jack raises a number of theoretical issues which may be valid but, again, I have not found to be problematic. Absent a definition of “Occupation” in the legislation a pragmatic approach in practice is all that is needed.
IHTM para 14333 in relation to a donor being excluded HMRC state “It is a question of fact whether the donor was excluded”; again in my experience there has been no need to take any formal steps under TOLATA 1996.
I would add that I am unaware of HMRC’s current practice.
Malcolm Finney
The trouble with HMRC’s current practice is that one may be unaware of it until it sinks its fangs into one’s leg. Indeed HMRC may itself have been unaware of it until the glorious opportunity presented itself and left it with no choice but to attack, given its sacred statutory duty to do so regardless of the hapless victim’s circumstances.
Jack Harper
I have seen a number of instances where a 90/10 split in favour of the done has been accepted by HMRC. On a couple of occasions a 95/5 split has been suggested, but has been rolled back from as being “too adventurous”.
A identified by others, though, it is not just the split that is important, but also the other elements between the donor and the done.
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event. Just to complicate matters, if the donee moves back in the donor makes another PET. If they move out again, another(?) GWR arises.
Whilst, at the point of death of the donor, there can only be 1 GWR, if the done has moved in and out a number of times, there could be multiple failed PETs of the same property.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
Hi Malcolm
I think “typically” only if the donor is properly advised.
Too often (in my experience) GWRs arise where the donor either is not advised, or they receive insufficient advice and do not properly understand what they have done (tax-wise) let alone the consequences should the donee cease occupation.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
As far as I can see s102C(6) prevents the operation of s102(4) in a s102B case, but whether that was intentional or not I can only speculate, But Paul’s last sentence underlines the peculiarity of what can happen in the much more common plain vanilla s102 case, and if that was intentional it was the design of an idiot.
Jack Harper
But the 2 problems with market rent are:
1 The recipient is liable to income tax with no corresponding deduction for the payer; and
2 What is a “market rent”? Or strictly per the statute “full consideration”, which might not only comprise rent. The risk is that any shortfall creates a GROB in the entire gifted asset as there is no proportionality. I have never done this with rent etc but no doubt one could riff on the trusted formula for a sale price as “rent of £X per [period] or such other amount as HMRC may agree to constitute full consideration”. Drafting not to be taken literally but customised.
The statutory term must surely encompass all the other attributes of an occupational tenancy such as term (and breaks) and usual covenants. This is not necessarily onerous but may need the advice of a proper chap or chapess with the skill to predict what the VOA will accept, bearing in mind that they are the only people in the UK who can value a property at market value plus or minus 10 pence, or so they believe.
Jack Harper
paul:
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event.
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
–
Previous Replies
I have seen a number of instances where a 90/10 split in favour of the done has been accepted by HMRC. On a couple of occasions a 95/5 split has been suggested, but has been rolled back from as being “too adventurous”.
A identified by others, though, it is not just the split that is important, but also the other elements between the donor and the done.
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event. Just to complicate matters, if the donee moves back in the donor makes another PET. If they move out again, another(?) GWR arises.
Whilst, at the point of death of the donor, there can only be 1 GWR, if the done has moved in and out a number of times, there could be multiple failed PETs of the same property.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Paul is right to comment on the likely unwitting position of transgressors of the law in this area. The problem is that it is anti-avoidance legislation, so is principally intended to be in terrorem. There is however never any excuse for badly thought out legislation which impacts not on sophisticated estate planning clients, added and abetted by some of the brains which so grace this Forum, but rather on les hommes et femmes de la rue (as my French teacher often described them).
I suspect that most are blissfully or artfully ignorant of the law meaning that it is most often honoured in the breach and key past events never figure on the HMRC radar. That passes the buck to the PRs who are supposed to at least ask about the existence of lifetime gifts: IHTM 05014.
IHT 400 Notes say"
“If the deceased had made any other gifts or ‘transfers of value’ since 18 March 1986, including transfers into trust, payment of insurance premiums for the benefit of another person, advances out of a trust fund or any assets that were taken out of a trust before death, you must fill in Schedule IHT403”. The Clue is in that Date!
Like all Revenue obligations those brimming with Mens Rea may ultimately have to discuss in detail the steps they did or did not take to discharge their relevant duty with Inspector Knacker of the Yard.
Jack Harper
Hi Malcolm
I think “typically” only if the donor is properly advised.
Too often (in my experience) GWRs arise where the donor either is not advised, or they receive insufficient advice and do not properly understand what they have done (tax-wise) let alone the consequences should the donee cease occupation.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
–
Previous Replies
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event.
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
At least in the past, “full consideration” was accepted as being X% of the rent which would be payable for the property (X% being the percentage of the property given away).
Jack makes the point that the donee is subject to income tax payable by the donor to avoid a GWR; which, of course, is true.
At the very least some simple mathematics may suggest whether the “full consideration” option would make sense. For example:
Married couple with children estate of £1.5m.
Anticipated IHT £500k x 40% ie £200k.
Market rent whole property circa say £25k pa.
Marginal rate income tax for donor 45%
In order for “full consideration” to make sense then (where N is number of years):
25,000 x 0.45 x N <= 40% x £500k
11,250N <= £200k
N <= 17.8 years
On this albeit very crude analysis if donor survives approx 18 years “full consideration” option may make sense.
Malcolm Finney
Fascinating. I had to look at this myself.
Everyone is correct to note the paucity of clear guidance, either statutory or even in case-law.
The key issue is how to represent the transfer from the donor on the IHT403, and that is by no-means obvious in relation to 1986 FA s.102
Q: is it your collective views that occupation within the house should be identifiably “separate” and not mixed, i.e. living on separate floors of the house, or having defined rooms each party can and cannot enter etc., or is co-occupation just a mingling across the whole square footage because doesn’t that affect how you answer question 8 on the IHT403 “continued to have use and enjoyment from the gifted asset”. Well, if both parties had defined separate areas of occupation then legitimate answer is “no”. The donor gave it way and didn’t have any further benefit of it.
Thanks,
Adam.
FA 1986 s 102B(4) is clear. Inter alia, where the house is jointly occupied it is irrelevant whether the donor/donee split the internal usage of the house or not. The response to Q8 IHT403 is “yes”; remember the donor and donee each have a right to occupation of the whole property.
Malcolm Finney
I once had a meeting with a mother and daughter. I began to feel distinctly that I was losing them in describing a plan of “partitioning” their home, The penny dropped when they asked whether it would be necessary to get a joiner to put up the partitions!
It is possible by conveyancing necromancy, not forgetting the common parts, as if theparties were at arm’s length. A gift by the mother to the daughter of her part becomes a carve-out, outside s102B and outside s102 as long as the daughter meets her share of owner’s expenses. The internal configuration of some houses will not facilitate this operation.
Jack Harper
FA 1986 s 102B(4) is clear. Inter alia, where the house is jointly occupied it is irrelevant whether the donor/donee split the internal usage of the house or not. The response to Q8 IHT403 is “yes”; remember the donor and donee each have a right to occupation of the whole property.
Malcolm Finney
–
Previous Replies
Fascinating. I had to look at this myself.
Everyone is correct to note the paucity of clear guidance, either statutory or even in case-law.
The key issue is how to represent the transfer from the donor on the IHT403, and that is by no-means obvious in relation to 1986 FA s.102
Q: is it your collective views that occupation within the house should be identifiably “separate” and not mixed, i.e. living on separate floors of the house, or having defined rooms each party can and cannot enter etc., or is co-occupation just a mingling across the whole square footage because doesn’t that affect how you answer question 8 on the IHT403 “continued to have use and enjoyment from the gifted asset”. Well, if both parties had defined separate areas of occupation then legitimate answer is “no”. The donor gave it way and didn’t have any further benefit of it.
Thanks,
Adam.
At least in the past, “full consideration” was accepted as being X% of the rent which would be payable for the property (X% being the percentage of the property given away).
Jack makes the point that the donee is subject to income tax payable by the donor to avoid a GWR; which, of course, is true.
At the very least some simple mathematics may suggest whether the “full consideration” option would make sense. For example:
Married couple with children estate of £1.5m.
Anticipated IHT £500k x 40% ie £200k.
Market rent whole property circa say £25k pa.
Marginal rate income tax for donor 45%
In order for “full consideration” to make sense then (where N is number of years):
25,000 x 0.45 x N <= 40% x £500k
11,250N <= £200k
N <= 17.8 years
On this albeit very crude analysis if donor survives approx 18 years “full consideration” option may make sense.
Malcolm Finney
Paul is right to comment on the likely unwitting position of transgressors of the law in this area. The problem is that it is anti-avoidance legislation, so is principally intended to be in terrorem. There is however never any excuse for badly thought out legislation which impacts not on sophisticated estate planning clients, added and abetted by some of the brains which so grace this Forum, but rather on les hommes et femmes de la rue (as my French teacher often described them).
I suspect that most are blissfully or artfully ignorant of the law meaning that it is most often honoured in the breach and key past events never figure on the HMRC radar. That passes the buck to the PRs who are supposed to at least ask about the existence of lifetime gifts: IHTM 05014.
IHT 400 Notes say"
“If the deceased had made any other gifts or ‘transfers of value’ since 18 March 1986, including transfers into trust, payment of insurance premiums for the benefit of another person, advances out of a trust fund or any assets that were taken out of a trust before death, you must fill in Schedule IHT403”. The Clue is in that Date!
Like all Revenue obligations those brimming with Mens Rea may ultimately have to discuss in detail the steps they did or did not take to discharge their relevant duty with Inspector Knacker of the Yard.
Jack Harper
Hi Malcolm
I think “typically” only if the donor is properly advised.
Too often (in my experience) GWRs arise where the donor either is not advised, or they receive insufficient advice and do not properly understand what they have done (tax-wise) let alone the consequences should the donee cease occupation.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
–
Previous Replies
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event.
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
But the 2 problems with market rent are:
1 The recipient is liable to income tax with no corresponding deduction for the payer; and
2 What is a “market rent”? Or strictly per the statute “full consideration”, which might not only comprise rent. The risk is that any shortfall creates a GROB in the entire gifted asset as there is no proportionality. I have never done this with rent etc but no doubt one could riff on the trusted formula for a sale price as “rent of £X per [period] or such other amount as HMRC may agree to constitute full consideration”. Drafting not to be taken literally but customised.
The statutory term must surely encompass all the other attributes of an occupational tenancy such as term (and breaks) and usual covenants. This is not necessarily onerous but may need the advice of a proper chap or chapess with the skill to predict what the VOA will accept, bearing in mind that they are the only people in the UK who can value a property at market value plus or minus 10 pence, or so they believe.
Jack Harper
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event.
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
–
Previous Replies
I have seen a number of instances where a 90/10 split in favour of the done has been accepted by HMRC. On a couple of occasions a 95/5 split has been suggested, but has been rolled back from as being “too adventurous”.
A identified by others, though, it is not just the split that is important, but also the other elements between the donor and the done.
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event. Just to complicate matters, if the donee moves back in the donor makes another PET. If they move out again, another(?) GWR arises.
Whilst, at the point of death of the donor, there can only be 1 GWR, if the done has moved in and out a number of times, there could be multiple failed PETs of the same property.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
As an aside, the law as it still stands is well set out in Lord Hoffman’ judgment in Ingram which retains all its sterling simplicity and “sophistication” despite the statutory amendments seeking to run the taxpayer around it.
Peter Harris
It sounds, Malcolm, that you share the view that s102B applies to a gift of an undivided share by a 100% owner and not just a gift of an existing undivided share by its owner. I lament that there is even a passing ambiguity in the statute and repeat my criticism of the banal brevity of IHTM14360. You are right about joint occupation not requiring an analysis of how much space each uses but a gift of a 90% interest as tenant in common might conceivably trip the GAAR and s102B(4)(b) must still be observed in any event.
If HMRC have a settled position on the 90% lark, or indeed, on any other aspect of s102B, their failure to expound it (or them if plural) in the Manual or the examples in Part D sub-part VI of the GAAR is not just irresponsible but contumacious. It is inappropriate for the Tax Authority (and contrary to the “collaborative” spirit, if not the weasel words, of the LSS Propaganda Bulletin) to keep a settled argument up its sleeve in order to bludgeon the taxpayer with a Gotcha in respect of a completed action, too late by then to alter, and for which an application for non-statutory clearance would surely have been refused:
"If you ask for advice and HMRC does not give it, we’ll tell you why. This could be because:
- HMRC does not think that there are genuine points of uncertainty, we’ll explain why we think this and direct you to the relevant online guidance [?IHTM14360]
- you’re asking HMRC to give tax planning advice, or to ‘approve’ tax planning products or arrangements
- your application is about treatment of transactions which, in HMRC’s view, are for the purposes of avoiding tax"
[Hundreds of Tax Avoiders under the Beds at the Somerset Lubianka on the Strand and in the Home Offices of Surrey and Oxfordshire!]
Has any member re s102B tried to get a NS clearance, or a reply to an informal request, or met a challenge in practice, or had a view vouchsafed exclusively to a Clandestine Cabal of Privileged Agents/The Great and Good?
Jack Harper
As an aside, the law as it still stands is well set out in Lord Hoffman’ judgment in Ingram which retains all its sterling simplicity and “sophistication” despite the statutory amendments seeking to run the taxpayer around it.
Peter Harris
Overseaschambers.com
–
Previous Replies
I once had a meeting with a mother and daughter. I began to feel distinctly that I was losing them in describing a plan of “partitioning” their home, The penny dropped when they asked whether it would be necessary to get a joiner to put up the partitions!
It is possible by conveyancing necromancy, not forgetting the common parts, as if theparties were at arm’s length. A gift by the mother to the daughter of her part becomes a carve-out, outside s102B and outside s102 as long as the daughter meets her share of owner’s expenses. The internal configuration of some houses will not facilitate this operation.
Jack Harper
FA 1986 s 102B(4) is clear. Inter alia, where the house is jointly occupied it is irrelevant whether the donor/donee split the internal usage of the house or not. The response to Q8 IHT403 is “yes”; remember the donor and donee each have a right to occupation of the whole property.
Malcolm Finney
–
Previous Replies
Fascinating. I had to look at this myself.
Everyone is correct to note the paucity of clear guidance, either statutory or even in case-law.
The key issue is how to represent the transfer from the donor on the IHT403, and that is by no-means obvious in relation to 1986 FA s.102
Q: is it your collective views that occupation within the house should be identifiably “separate” and not mixed, i.e. living on separate floors of the house, or having defined rooms each party can and cannot enter etc., or is co-occupation just a mingling across the whole square footage because doesn’t that affect how you answer question 8 on the IHT403 “continued to have use and enjoyment from the gifted asset”. Well, if both parties had defined separate areas of occupation then legitimate answer is “no”. The donor gave it way and didn’t have any further benefit of it.
Thanks,
Adam.
At least in the past, “full consideration” was accepted as being X% of the rent which would be payable for the property (X% being the percentage of the property given away).
Jack makes the point that the donee is subject to income tax payable by the donor to avoid a GWR; which, of course, is true.
At the very least some simple mathematics may suggest whether the “full consideration” option would make sense. For example:
Married couple with children estate of £1.5m.
Anticipated IHT £500k x 40% ie £200k.
Market rent whole property circa say £25k pa.
Marginal rate income tax for donor 45%
In order for “full consideration” to make sense then (where N is number of years):
25,000 x 0.45 x N <= 40% x £500k
11,250N <= £200k
N <= 17.8 years
On this albeit very crude analysis if donor survives approx 18 years “full consideration” option may make sense.
Malcolm Finney
Paul is right to comment on the likely unwitting position of transgressors of the law in this area. The problem is that it is anti-avoidance legislation, so is principally intended to be in terrorem. There is however never any excuse for badly thought out legislation which impacts not on sophisticated estate planning clients, added and abetted by some of the brains which so grace this Forum, but rather on les hommes et femmes de la rue (as my French teacher often described them).
I suspect that most are blissfully or artfully ignorant of the law meaning that it is most often honoured in the breach and key past events never figure on the HMRC radar. That passes the buck to the PRs who are supposed to at least ask about the existence of lifetime gifts: IHTM 05014.
IHT 400 Notes say"
“If the deceased had made any other gifts or ‘transfers of value’ since 18 March 1986, including transfers into trust, payment of insurance premiums for the benefit of another person, advances out of a trust fund or any assets that were taken out of a trust before death, you must fill in Schedule IHT403”. The Clue is in that Date!
Like all Revenue obligations those brimming with Mens Rea may ultimately have to discuss in detail the steps they did or did not take to discharge their relevant duty with Inspector Knacker of the Yard.
Jack Harper
Hi Malcolm
I think “typically” only if the donor is properly advised.
Too often (in my experience) GWRs arise where the donor either is not advised, or they receive insufficient advice and do not properly understand what they have done (tax-wise) let alone the consequences should the donee cease occupation.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
–
Previous Replies
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event.
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
But the 2 problems with market rent are:
1 The recipient is liable to income tax with no corresponding deduction for the payer; and
2 What is a “market rent”? Or strictly per the statute “full consideration”, which might not only comprise rent. The risk is that any shortfall creates a GROB in the entire gifted asset as there is no proportionality. I have never done this with rent etc but no doubt one could riff on the trusted formula for a sale price as “rent of £X per [period] or such other amount as HMRC may agree to constitute full consideration”. Drafting not to be taken literally but customised.
The statutory term must surely encompass all the other attributes of an occupational tenancy such as term (and breaks) and usual covenants. This is not necessarily onerous but may need the advice of a proper chap or chapess with the skill to predict what the VOA will accept, bearing in mind that they are the only people in the UK who can value a property at market value plus or minus 10 pence, or so they believe.
Jack Harper
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event.
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
–
Previous Replies
I have seen a number of instances where a 90/10 split in favour of the done has been accepted by HMRC. On a couple of occasions a 95/5 split has been suggested, but has been rolled back from as being “too adventurous”.
A identified by others, though, it is not just the split that is important, but also the other elements between the donor and the done.
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event. Just to complicate matters, if the donee moves back in the donor makes another PET. If they move out again, another(?) GWR arises.
Whilst, at the point of death of the donor, there can only be 1 GWR, if the done has moved in and out a number of times, there could be multiple failed PETs of the same property.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
FA 1986 s 102B(4) is clear. Inter alia, where the house is jointly occupied it is irrelevant whether the donor/donee split the internal usage of the house or not. The response to Q8 IHT403 is “yes”; remember the donor and donee each have a right to occupation of the whole property.
Malcolm Finney
Fascinating. I had to look at this myself.
Everyone is correct to note the paucity of clear guidance, either statutory or even in case-law.
The key issue is how to represent the transfer from the donor on the IHT403, and that is by no-means obvious in relation to 1986 FA s.102
Q: is it your collective views that occupation within the house should be identifiably “separate” and not mixed, i.e. living on separate floors of the house, or having defined rooms each party can and cannot enter etc., or is co-occupation just a mingling across the whole square footage because doesn’t that affect how you answer question 8 on the IHT403 “continued to have use and enjoyment from the gifted asset”. Well, if both parties had defined separate areas of occupation then legitimate answer is “no”. The donor gave it way and didn’t have any further benefit of it.
Thanks,
Adam.
At least in the past, “full consideration” was accepted as being X% of the rent which would be payable for the property (X% being the percentage of the property given away).
Jack makes the point that the donee is subject to income tax payable by the donor to avoid a GWR; which, of course, is true.
At the very least some simple mathematics may suggest whether the “full consideration” option would make sense. For example:
Married couple with children estate of £1.5m.
Anticipated IHT £500k x 40% ie £200k.
Market rent whole property circa say £25k pa.
Marginal rate income tax for donor 45%
In order for “full consideration” to make sense then (where N is number of years):
25,000 x 0.45 x N <= 40% x £500k
11,250N <= £200k
N <= 17.8 years
On this albeit very crude analysis if donor survives approx 18 years “full consideration” option may make sense.
Malcolm Finney
Paul is right to comment on the likely unwitting position of transgressors of the law in this area. The problem is that it is anti-avoidance legislation, so is principally intended to be in terrorem. There is however never any excuse for badly thought out legislation which impacts not on sophisticated estate planning clients, added and abetted by some of the brains which so grace this Forum, but rather on les hommes et femmes de la rue (as my French teacher often described them).
I suspect that most are blissfully or artfully ignorant of the law meaning that it is most often honoured in the breach and key past events never figure on the HMRC radar. That passes the buck to the PRs who are supposed to at least ask about the existence of lifetime gifts: IHTM 05014.
IHT 400 Notes say"
“If the deceased had made any other gifts or ‘transfers of value’ since 18 March 1986, including transfers into trust, payment of insurance premiums for the benefit of another person, advances out of a trust fund or any assets that were taken out of a trust before death, you must fill in Schedule IHT403”. The Clue is in that Date!
Like all Revenue obligations those brimming with Mens Rea may ultimately have to discuss in detail the steps they did or did not take to discharge their relevant duty with Inspector Knacker of the Yard.
Jack Harper
Hi Malcolm
I think “typically” only if the donor is properly advised.
Too often (in my experience) GWRs arise where the donor either is not advised, or they receive insufficient advice and do not properly understand what they have done (tax-wise) let alone the consequences should the donee cease occupation.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
–
Previous Replies
As regards what happens of the done moves out – a GWR arises if the donor dies within 7 years of that event.
Typically, the donor to avoid a reservation of benefit from arising will pay market rent to the donee.
Malcolm Finney
Correct.
I concur with your observations and comments and like you would welcome any responses to your final comment “Has any member re s102B tried to get a NS clearance, or a reply to an informal request, or met a challenge in practice, or had a view vouchsafed exclusively to a Clandestine Cabal of Privileged Agents/The Great and Good?”
Malcolm Finney