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HMRC fights to tax trusts of over-90s

HM Revenue and Customs is appealing against the Special Commissioners’ ruling that people over 90 can benefit from discounted gift plans.

In February, the Special Commissioners ruled against the HMRC’s view that a woman in her 90s who died five months after setting up a discounted gift trust should receive little or no discount as they would be uninsurable.

The executors of the woman, Mrs Bowers, argued that a discount should apply.

The Special Commissioners are HMRC’s independent appeal body. They set an adjusted discount figure for gifts made after the death of the deceased settlor but HMRC says it will appeal against this decision.

Pending the appeal, the HMRC has posted a holding statement on its website, saying that existing open cases will remain under review but it will not press for additional inheritance tax payments until this test case is resolved.

Standard Life head of estate planning Julie Hutchison says : “While the executors of the late Mrs Bower are, I suspect, disappointed that HMRC has appealed against the decision, the final outcome, once all steps are heard, will bring clarity one way or the other for advisers and their clients on whether settlors over the age of 90 should receive a discount.

“Solicitors dealing with estates where the client had a discounted gift trust and was over 90 at set-up can refer to new guidance just posted on to the HMRC website. This holding statement sets out the approach that the HMRC plan to take to cases which are new and pending.

“I welcome the statement that HMRC will not press for payment of additional IHT pending final resolution of the Bower case.”

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