Qualifying IIP Trust and IHT

Trusts Discussion
1

My deceased client held a qualifying IIP in a trust which holds valuable private company shares. A professional share valuation (to include BPR appraisal/claim) is necessary. The professional fees for which are likely to be in the region of £10,000. On the basis the valuation is necessary to establish the IHT liability which will be apportioned between the trust and the deceased’s free estate, is it right that the same apportionment would apply to the burden of the professional fees as between the Estate and the Trust? (The remainder interests in the Trust are different to the beneficiaries of the Estate). To the extent of the Trust’s liability for the fees, should these be borne by the whole trust or just my late client’s share (he is one of a number of IIP beneficiaries still living).

Caroline Bates
Davidson Mahon

2

I don’t see how the estate could (legitimately) contribute towards the cost of valuing the trust’s assets. The cost of valuing the shares is a necessary cost of the trustees complying with their obligation to make a return. Presumably the PRs will incur their own costs of compliance without any contribution from the trust. The allocation of the IHT can be left to HMRC once they have all the relevant information.

Paul Davies
Clarke Willmott LLP