Has anyone made use of the new IHT100C form as yet? I think that there is an error in the instructions for calculating the tax due in the circumstances I am dealing with.
I have a settlement to which additional capital payments have been made since the start date and there has now been a capital advance before the first ten year anniversary. Section H of the new form instructs me to calculate the effective rate (H10) in the usual way and then in boxes H11 and H12 calculates an “Appropriate Fraction” based on the number of completed quarters since the inception of the trust to the date of the chargeable event which is applied to the effective rate. It is this latter rate which is then applied to calculate the tax due which is fine.
Boxes H18 and H19 then reduce the tax payable when the chargeable assets have not been relevant property for the whole of the period since the start of the trust. The rate applied in this calculation is the one from box H12 i.e. the rate adjusted for the period from inception to the exit. I believe this is wrong and that the appropriate rate should be the one for the whole ten year period because it is then divided by 40 and multplied by the complete quarters during which the assets were in the trust.
The difference in my case is an additional £1,600 of tax due.
A complicated one but can anyone check that my understanding is correct?