Lifetime gifts and associated operations

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 which gifts come with strings attached namely a seven-year tapering liability to a potential inheritance tax charge if your benefactor is rude enough to die within seven years of making a gift. The rules apply to gifts made to individuals which are normally potentially exempt transfers (PETs) and to chargeable lifetime transfers but also to gifts where business property relief (BPR) has been claimed but the qualifying asset is no longer held on a donor’s premature death.

Under IHTA 1984 s 3A a PET is successful and therefore exempt from all inheritance tax on the...