IHT on EBT settlement

[Saleos]

I reckon there’s a greater than 65% chance they don’t have a hand and have been bluffing all along.

some good news out of the sale of WTT Group. It appears to have been a share sale of HoldCo. So as well as the assets the purchaser acquired liabilities too. If they’re sensible they will have various warranties and indemnities in place against the vendor too. As a proper firm the acquirer will have PI and run off cover. To cover, for example, claims for professional negligence in advising clients to have loans written off despite that creating a stand alone income tax and IHT charge of which said clients weren’t warned. Or then telling those clients not to disclose it to HMRC. Or perhaps, for example, advising clients to pursue a doomed “resolution strategy” without warning that failure to pay or declare the LC would add at least 15% penalties. And risk HMRC pursuing tax on fees.

Time to send ambulance chasers after the ambulance chasers who are off in their getaway car?!

[jamesbrown]

Perhaps they're waiting until all the other cases have been lost, before revealing their winning hand.

They always had a winning hand, it was just hiding in plain sight

[dammit chloe]

What's actually happened with WTT, have they sold out to Floggit and Scarper Ltd or something?

[Iliketax]

Re IHT you'd be right about the income point IF the income tax charge arose on the same event as that which gives rise (in HMRC's view) to the IHT charge. But it doesn't. The IT charge arose, HMRC say, when the loan was received (although strictly following RFC it would have been when the funds were contributed to the Trust) but the IHT charge arises several years later under, again they say, under s72 IHTA - an 'exit charge' - when those loans are written off. So the exemption that prevents a charge to both IHT and IT on the same event doesn't apply.

I don't really know much about IHT and so, for what it worth:

1. I'm not convinced by the exit charge on the waiver of the loan being on its full face value. Immediately before the loan receivable is waived, what is it's market value of the receivable? The loan is likely to be unsecured, have not been repaid on its due date (if there was one), likely has no interest on it (or if it does, has never been paid), may not be adequately documented and may be difficult to enforce. It would be a question of fact, but I'd expect that it would be worth significantly less than the amount of the loan. So the disposition referred to in s72(2)(c) may be a significantly less than the headline amount. But it wouldn't be zero.

2. There's also the possibility that a disposition occcured when the loan was made, especially if it is not interest bearing and repayable a long way into the future. But typically the loans would have been made very close to the time that the money was paid to the trust. So when you look at s70, the chances are that the money lent hasn't been held for less than three months, meaning the rate is 0%.

3. Assuming it is a s86 trust, there could not be a charge between the loan being made and being waived as no payments are made and the trustees would not have made a disposition.

[Fred Bloggs]

What a fascinating thread. The gravy train just keeps on rolling along. It seems.

[woody1]

Surely there can't be many more ambulances to chase.

Although I see, from the thread at the top of this forum, there are still plenty of firms peddling the tax scams, presumably lining up the next wave of casualties.