Crowe v Appleby

Under a Will, one share of a property is left absolutely to A, and the other is in trust subject to an age contingency to B.

The property is sold. Does Crowe v Appleby mean the disposal of the whole property is treated as one for CGT as by the trustees?

In the CGT manual CG37543 it states:

principle of Crowe v Appleby applies where a will leaves land in trust and there are some absolute interests, whereas other persons have life interests or contingent interests.

An answer to such a question in Taxation in 2008 believes the opposite.

I do not see how HMRC can use Crowe
v Appleby to support their argument, as that Will settled the whole property on 4 separate life interests-and it was a sale after one life tenant had died, with a remainderman taking absolutely. I can see the logic for saying it remained settled there,
as the whole property was originally settled, but that does not apply to the above situation. What is the experience/thoughts of members?

Simon Northcott

There is some confusion around the application of Crowe v. Appleby (CvA), and HMRC has not been very good at dispelling it.

If property is given in trust for A and, upon A’s death, B is entitled to a half share absolutely, with the other half being subject to a trust for C, there is no doubt that CvA applies.

Although the paragraph from the CGT Manual states CvA applies in the circumstances to which Simon refers, I have previously had confirmation from HMRC that where there are distinct gifts of shares in a property, each will be considered separately, so that CvA does not apply to combine those gifts for CGT purposes. However, there was a caveat – that if the property was the subject of a single gift combining absolute and trust interests CvA would apply.

If the property is, say, gifted to A, B and C as shall attain the age of 25, and A has already attained the specified age (but at least one of the others has not), then it seems CvA would apply. If all had attained age 25, then it would not apply.

The situation is further confused by the fact that HMRC will accept the appropriation of a share in property to beneficiaries, so that any gain on sale may be apportioned and separately assessed upon the executor and beneficiaries (even if some of the beneficiaries are trustees).

I wonder if, in the situation to which Simon refers, there might be any benefit in making the sale as personal representative so as to avoid the question (although I anticipate that he will already have considered and, perhaps, discounted that possibility).

Paul Saunders