Carla Brown

Partner, Solicitor and Head of Wills, Trusts & Probate

DATE PUBLISHED: 13 Feb 2020 LAST UPDATED: 04 Jul 2022

Inheritance Tax Planning – a warning!

For years the wide range of Inheritance planning schemes, collectively referred to as “Double Trust” or “Home Loan” schemes, which were strongly marketed in the 1990’s and early 2000’s have been under scrutiny by HMRC. HMRC introduced legislation shortly after losing each of two high profile cases known as Ingram and Eversden, to close down the most common types of schemes.

The Revenue wanted to encourage people to review the tax planning measures they had entered into, with the hope that many of them would opt back into the Inheritance Tax regime, which many people did.

There were, however, many different variants of these arrangements and some may well still work for Inheritance Tax planning.

The recent case of Shelford v HMRC (2020 UKFTT 0053 TC) demonstrates the potential danger of relying on strategies that were executed in the past. In this case John Herbert had, in 2002, entered into an arrangement which sought to allow him to continue to occupy his home rent free for the rest of his life, whilst removing the value from his estate for Inheritance Tax. However, the First Tier Tax Tribunal have ruled that the property’s value should be included in both his estate and the settlement he established as part of the scheme.

Tribunal judge Nicholas Aleksander noted that this ‘serves as a warning that the implementation of tax avoidance schemes can sometime [sic] have the consequence of the participants paying more tax than if they had done nothing’.

It is a good idea to regularly review your tax planning arrangements, especially now with far closer scrutiny from HMRC, particularly if you entered into a Double Trust or Home Loan scheme in the past.

Our experts in our Wills, Trusts and Probate department can assist you to review your circumstances in light of current legislation and political attitudes and evaluate how best to structure your affairs. They can help to ensure you are planning sensibly but reducing the risk of a detailed investigation after your death, which can cause significant delay and enormous stress for your executors and loved ones, as well as considerable cost to your estate. You can contact the Wills, Trusts and Probate team on 01202 525333 or visit their page.

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