Commentary

I3.115 Associated operations

IHT, trusts and estates

I3.115 Associated operations

I3.115 Associated operations

A disposition includes all those effected by associated operations1. Where operations are associated, their combined effect on the value of the transferor's estate will be taken into account in determining whether there is a transfer of value and, if there is a transfer of value, what the value transferred by it is.

Whether associated operations make up a disposition is also relevant to:

  1.  

    •     what property is disposed of (an issue relevant to the relief available for various types of property)

  2.  

    •     whom the property is disposed (an issue relevant to the exemptions available for particular transfers eg, to a spouse)

  3.  

    •     the availability of exemptions

  4.  

    •     the meaning of 'settlement' (see I5.111, I5.118)

Where a controlling shareholder with a 60% holding in a company gives half of the holding to his son, having first transferred half to his wife who subsequently also transfers the shares to the son, the effect is to pass a controlling shareholding from father to son. HMRC would use the associated operations provisions to ensure that the value of the controlling holding was taxed. However, if the husband transfers some money to his wife so that she may make a gift to her son on marriage, this is an innocent and reasonable transfer and will not be caught by the provisions.

Definition

The definition of associated operations2 is a very wide one, covering any two or more operations of any kind where:

  1.  

    (a)     the operations affect the same property, or one of them affects

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