A settlor creates, by instructing an IFA, a self-settled disabled persons trust under s.89(A)(1)(b) Inheritance Tax Act 1984.
The IFA claim that the settlor had a condition at that time that would in the future result in the settlor falling within the definition of a “disabled person” in para 1 Sch 1A Finance Act 2005 and therefore being exempt from Inheritance Tax on creation of the trust.
In relation to making a claim to be treated as a “disabled person” under s.89B(1)(d)(iii) (and s.89(A)(1)(b) to which it refers), it states that you need to satisfy HMRC that the settlor had such a condition that would expect them to fall within the definition of “disabled person” in the future.
(1) How necessary is it to get HMRC clearance for the trust before the trust is created?
(2) How difficult is it to obtain HMRC clearance after the trust has been created?
(3) We assume a letter to HMRC with the evidence to show the settlor had a condition at the time the trust was created that would lead to the settlor falling within the definition of a “disabled person” in para 1 Sch 1A Finance Act 2005 is required? Is a doctor’s report assessing the condition essential?
(4) What is your experience of how HMRC approach this?
Thank you in advance.
Furley Page LLP