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Lifetime gifts and associated operations

01 June 2021 / Sam Hart
Issue: 4794 / Categories: Comment & Analysis
The gift that keeps on … taking

Key points

  • The tax due for a failed PET must be calculated at the date of death of the donor.
  • If the original gift qualified for business property or agricultural relief the donee could be saved from an unexpected tax bill.
  • IHTA 1984 s 113B provides for replacement property provisions to ‘save’ gifts from a BPR clawback.
  • BPR is not available if the property is subject to a binding contract for sale at the date of the transfer.
  • Case law has found that HMRC cannot simply determine two operations to be associated simply because this results in a higher tax charge.

It is always nice to receive a gift – Trojan horses notwithstanding – particularly when said gifts are substantial sums of cash or assets. However not all gifts end up being quite as generous as they might at first seem. Despite best intentions there are cases in...

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