Mr A is non-UK resident and domiciled. He has loaned a substantial amount of money to a Channel Islands structure (owned by members of his family, but not him), which has used the money to fund (via discounted bonds) its wholly-owned UK subsidiary to invest in UK residential property.
Since 2017, Mr A has been exposed to UK IHT thanks to sch A1, IHTA 1984. Two planning points are being considered.
- If Mr A gifts the loans to his grandchildren, does the 7-year rule apply? In which case the sooner that he does this, the better.
- If Mr A leaves the loans in his Will to his (equally non-res/non-dom) Brother, in practical terms how is this reported to HMRC so that the IHT can be accounted for?
Harris & Trotter LLP