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In Alberto Nader, Alison Nader, Harold Dickins & Ors v HMRC [2019] TC06524 the First Tier Tribunal found that a series of transactions designed to reduce the deceased's estate by creating a loan to an offshore trust was ineffective in reducing the IHT due on her death.

A ‘transfer of value’ is a disposal made by an individual which results in the value of their estate being reduced.  

A few weeks before her death Miss Dickins entered into a scheme which involved borrowing money to buy a life income interest in an offshore trust, as part of a series of transactions. Her estate was valued at just over £1million.

The FTT dismissed the appeal:

Though not necessary to determine the case, the judge addressed HMRC’s assertion that Miss Dickens was a settlor of the offshore trust. He distinguished the definition of ‘settlor’ and ‘settlement’ for IHT from that for income tax, where an element of bounty is required. He found Miss Dickens had indirectly provided the funds for the trust and therefore was its settlor for IHT purposes.

Comment

Successful death-bed IHT planning has always been difficult to achieve. Coupled with the fact that IHT is generally the last thing individuals want to be thinking about at this stage in their lives, the case for taking advice before ill-health forces the issue is reinforced by this decision.

Links to our guides:

IHT: Transfers of value

IHT: estate planning checklist

Non-resident trusts

External link:

Alberto Nader, Alison Nader, Harold Dickins & Ors v HMRC [2019] TC06524