Life Interest Trust - death of life tenant

Morning all,

I would be most grateful for your help.

I am dealing with a life interest trust. The life tenant has died, and the trust comes to an end. The trust assets include business and investment assets. I have used the instalment option to pay the IHT on the business asset and paid the IHT on the rest. The business asset was valued by an accountant and all requisite paperwork filed with HMRC. HMRC issued a calculation which mirrored mine. Is this acceptance of the accountant’s valuation?

The issues are:

  1. Another shareholder of the business has died and HMRC are disputing the valuation of their holding. Could this have an impact on my trust?
  2. The investments sold for a loss and I filed the IHT 35 form in September 2020. Despite chasing HMRC twice, I am yet to hear from them to settle the remaining IHT. Are you finding that these applications are taking around 6 months or longer to be dealt with? Or could this be related to the shareholding valuation dispute?

Any guidance would be much appreciated.

Hi Parveen,

I think you can take it that six months is a very short time in HMRC terms when dealing with a matter such as yours. The fact that HMRC have issued an IHT calculation mirroring yours should not be taken as necessarily agreeing the figures which have been submitted for the trust assets. As you will appreciate, the value of the life tenant’s will be aggregated with the value of the trust to arrive at the value for IHT. Obviously if you are dealing with that estate also, you have a certain amount of control as to how quickly the matter might proceed but if you are not, then you have to rely on whoever is dealing with that estate. I would suggest that 12 to 18 months in normal times would be a reasonable estimate but in current pandemic times that could extend to a few years. Hopefully not for you and your client’s sake!

Patrick Moroney
Bwl solicitors

Thanks Patrick, I think all timescales need to be stated as 12-18 months in the current circumstances!

Best regards.