HMRC’s reading of s.102(4) FA 1986, whilst directed at settlements of excluded property, seems to indicate that gifts of excluded property by a non-dom as a whole may not be subject to reservation under the general rule of excluded property being and remaining outside the non-domiciliary’s estate at death. My thoughts are that any gift with retention, I insist not a reservation, of a usufruit which is a right in rem not a personal right over a non-UK situate asset cannot therefore be a GROB. I understand that others may have or have issued a different opinion and would like to raise the issue on the Forum, prior to the consultation on the IHT issues on a change to habitual residence.
Any comments gratefully appreciated.
For clarity, the nue-propriété is given away, which is not a possessory right and only becomes such on the extinction of the usufruit, and is probably not a reversionary right either. The “Gift” simply does not fit with the statutory wording of s102, or the amending sections ss102A-C whether in the context of “excluded” property be it “settled” or “unsettled” to adopt HMRC’s cute wording in the Manual. S.102A (3) appears not to bite either as the usufruit interest is part of the property (propriété/pleine-propriété) initially acquired under (4)(b) and is therefore not necessarily “significant” if it is “retained” even within the “relevant period”.