Thursday 11 February 2010

Present: IHT: Tony Key, Ken Waite, Sarah Kelsey, Simon Thompson and Colin Varney.

TACT: Paul Saunders (Barclays Wealth), Michael Coulshed (HSBC Trust Co) and Nick Dimmock (Nat West).

Q1 s.178/179 IHTA 1984 –(i) There appears to be an element of misunderstanding, which appears to be encouraged by IHTM34211, that relief under s.178/179 IHTA is limited only to those situations identified in that paragraph, or that some other purpose test exists. The legislation does not provide for any such restriction. It would be useful to clarify this point and, perhaps update the IHT Manual to ensure a consistent understanding. 

A1(i): The essential point is whether the sales were made by the appropriate person or not. Sales made during the normal administration of the estate will be made by the appropriate person; however, once the administrators reach the point where they are holding assets as bare trustees for the beneficiaries, any sales would be at the behest of the beneficiary and therefore not by the appropriate person. The words at IHTM34211 were intended to be examples of the former situation; but not limited to the circumstances described. The words are probably in the wrong place and the IHT Manual will be changed so the point is made on a more appropriate place in the Manual.

Q1(ii): Where unit linked investment bonds are held by the deceased, relief has been allowed where a loss has arisen on the realisation of those bonds. The use of unit linked bonds is reducing, in favour of bonds linked to track a particular index (e.g. the FT 100). As with unit linked bonds, the redemption value of these bonds can vary after death depending on “Market movements”. Going forward, can relief be allowed on losses on realisation of such bonds?