Commentary

I5.1257 Transfers of value linked with trustee borrowing—history

IHT, trusts and estates

I5.1257 Transfers of value linked with trustee borrowing—history

I5.1257 Transfers of value linked with trustee borrowing—history

Legislation was introduced in 2000 to counter an avoidance device known as a 'flip-flop scheme'1. The provisions originally applied to both UK resident and non-resident settlements but they ceased to apply to UK resident settlements after 5 April 20082; they continue to apply to non-resident settlements.

The basic elements of the original flip-flop scheme were as follows3:

  1.  

    (a)     a settlor would create two settlements, A and B, in which he had an interest and which both had identical beneficiaries

  2.  

    (b)     assets which the settlor wished to sell were introduced into settlement A; this was a disposal at market value for him, but he could claim holdover

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