In what circumstances would section 142(3) of the Inheritance Tax Act 1984 (IHTA 1984) apply to treat an arrangement where a variation is made to utilise the spouse exemption and where the surviving spouse intends to make lifetime gifts later as involving extraneous consideration such that IHTA 1984, s 142(1) relief would not be available?

For information about post-death rearrangements, including deeds of variation pursuant to section 142 of the Inheritance Tax Act 1984 (IHTA 1984), see Practice Notes:

1. •

   Variation of Will or intestacy after death

2. •

   Variation of Will or intestacy after death—Q&As

3. •

   Post-death rearrangements

The condition in IHTA 1984, s 142(3) prevents the ‘reading back’ relief in IHTA 1984, s 142(1) where the variation is made for ‘any consideration in money or money's worth other than consideration consisting of the making, in respect of another of the dispositions, of a variation or disclaimer to which that subsection applies’. This condition would therefore catch any consideration provided from a source outside the estate, whether provided directly or indirectly.

We refer you to the Commentary at Anti-avoidance