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Intention sufficient

18 December 2014
Issue: 4483 / Categories: Tax cases , Inheritance Tax , Trusts

P Chadda & others (MB Tobin’s executors) (TC4154)

A married couple owned their property as joint and several tenants. They took inheritance tax (IHT) planning advice in 2003 because they wished to ensure the maximum amount of money would be left on their deaths to care for their disabled daughter. It was necessary to sever the joint tenancy to achieve their aim.

The husband died in September 2003 and under his will a nil rate band trust came into effect. The amount paid into the trust was the equivalent of the nil rate band which was then £255 000. The plan was to first transfer the property to the wife who would pay the nil rate band amount to the trust although the understanding was payment would not be made until after her death.

She died in July 2007 and HMRC asked for clarification about the transfer of the property....

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