I would be interested in any experience or knowledge any members have surrounding the IHT treatment of assets ‘gifted’ by the deceased where it appears there may have been financial abuse.
In the 7 years before death there were numerous transfers from the deceased’s account and cash withdrawals in excess of £500k. For at least the 12months prior to death we are instructed that the deceased did not have capacity. We have reported to the police.
However, how do HMRC view this? If gifts, there will be an IHT liability. Regarding cash withdrawals, how do we account for this?
What evidence is there that these payments were “gifts”? Strictly that word only appears in the GROB legislation so the operative question is whether they were transfers of value. Prima facie they were, as this is just a mathematical calculation, but arguably they will be void in law (so not a “disposition” within s3(1) IHTA) or voidable within s150 IHTA. Or that the loss is balanced by a right of recovery, so no initial TOVs occur, and any subsequent failure to recover if that eventuates is not a disposition at all.
HMRC are unlikely to wish to argue, at least not in public, that theft or fraud gives rise to a TOV! A conclusive investigation by Inspector Knacker of the Yard will doubtless do the trick so the awkward outcome will be if that is not conclusive and if civil action is not taken, perhaps for the pragmatic reason that the target is not worth pursuing. You are self-evidently unable to broadcast the precise facts on here but HMRC will need to be convinced by them and your advocacy for the desired result.