Commentary

I3.703 Retroactive nature of the charge

IHT, trusts and estates

I3.703 Retroactive nature of the charge

I3.703 Retroactive nature of the charge

Although the pre-owned assets provisions have effect for the year 2005–06 and subsequent years of assessment1 and therefore apply only after 5 April 2005, the legislation clearly intends that exposure to the resulting income tax charge may be triggered by transactions that occurred or circumstances that prevailed at any time after 17 March 19862.

When the measure was first mooted in December 20033, no such 'backstop date' was suggested, and there was concern that older taxpayers would face income tax liabilities arising from transactions or circumstances decades previously. Following representations, the backstop of 18 March 1986 was incorporated into the Finance Bill. The rationale for this date is that the concepts of the potentially exempt transfer ('PET') and the gift with reservation ('GWR') were introduced into inheritance tax with effect from 18 March

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