Transfer of significant cash funds from husband to non-Dom wife
Were he to die within 7 years, we could use the election to get rid of the problem, but I’d like to diagnose the problem properly
My view is that the gift, in the absence of evidence to the contrary, is to be regarded as a 50:50 ownership by way of presumption of advancement
My colleague seems to believe that this is overridden by the standard treatment in s5(2) IHTA, which makes no reference to the concept – electronic searches of the IHT manual don’t help
Can anyone referee between us?
The Fry Group
Presumption of advancement is abolished under Equality Act 2010 s.199 (although I don’t think this section is yet in force?).
In any event, it is probably likely that the courts would ignore or give short shift to any such presumption in particular between husband and wife.
Were the presumption to apply then in your scenario the whole cash transferred would be that of the recipient spouse (not just 50/50).
The real issue is what was the intention of the parties. If for example cash was transferred from transferor’s sole bank account to the sole bank account of the transferee then it is highly likely that a gift has taken place.
Problems have typically arisen with respect to joint bank accounts on death of one of the account holders. As a very broad guide, for IHT, IHTA 1984 s5(2) and/or the reservation of benefit provisions have often treated as the transferor having retained an interest in the monies in the joint account (Sillars v IRC ; Matthews v HMRC [2012}).