Thank you Malcolm. That’s the position we have adopted, but HMRC are not accepting the same.
They are stating that Section 91 states that where a person is entitled to an IIP in the residue of an unadministered estate they shall be treated as the beneficial owner of the estate from the death of the deceased person. This seems illogical but is supported by their manual at
However, as part of the half share was appointed to the nil rate band trust, albeit after wife’s death, surely this would mean that the related property rules should not apply?
To cut a long story short, HMRC have rejected the discount on the basis that H’s half share in the property was not appropriated to his NRB Trust at W’s death. When this was later appropriated and then part appointed to a beneficiary under s144, HMRC advised that s144 IHTA is a deeming provision only and therefore no discount applies. Our argument is s144 is read back and therefore at W’s death, the beneficiary and W owned the property, allowing for a discount.
Any additional thoughts would be welcome.