Commentary

I5.1258 Transfers of value linked with trustee borrowing—the anti-avoidance legislation

IHT, trusts and estates

I5.1258 Transfers of value linked with trustee borrowing—the anti-avoidance legislation

I5.1258 Transfers of value linked with trustee borrowing—the anti-avoidance legislation

Conditions for Schedule 4B to apply

Anti-avoidance provisions apply if there are assets leaving a non-resident trust, other than by way of arm's length sales, with the trustees being in debt in respect of borrowings that were not used for narrowly defined purposes.

This anti-avoidance legislation applies if three basic conditions are met1:

  1.  

    •     the trustees of a settlement (that is within the settlor charge2 or beneficiary capital payment3 provisions) make a 'transfer of value' on or after 21 March 20004 by transferring value out of the settlement by transferring cash or assets for no consideration or by making a loan

  2.  

    •     at the time of the transfer the trustees have outstanding debt

  3.  

    •     the proceeds of the borrowing have not been used for normal trust purposes (see I5.1259)

Where these conditions are met, the trustees are deemed to have sold and reacquired at market value all (or a

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