A gift of £528,000 in cash to a close limited company is contemplated. This will be a chargeable transfer: it cannot be a PET as IHTA 1984 s.3A requires the recipient to be an “individual” (Chamberlain & Whitehouse 31.15, and IHTM04060 confirms).
As an LCT we’ll pay tax at lifetime rates, which is fine, and return the transaction on IHT100a as a transfer of value that is immediately chargeable.
My question what, if anything, happens in 10 years time? Will the subject matter of the gift be relevant property? Will a ten yearly charge arise?
I am leaning towards the conclusion that the gifted cash in the hands of the company does not constitute a settlement because it fails to meet the definition in IHTA 1984 s.43 and therefore that there is nothing comprised in a settlement for IHTA 1984 s.64 to bite upon. We would have therefore an LCT and thereafter nothing at all (other than value indirectly in the estates of the participants in the close company).
Am I right?