Commentary

I5.743 The acquisition of powers of appointment—anti-avoidance provisions

IHT, trusts and estates

I5.743 The acquisition of powers of appointment—anti-avoidance provisions

I5.743 The acquisition of powers of appointment—anti-avoidance provisions

Without express provision, the treatment of powers over settled property as not included in anyone's estate for IHT purposes could be open to exploitation for tax avoidance. The most obvious method would be tax-free diminution of a person's estate by purchasing a general power over settled property for a sum in cash equal to the value of the power. Accordingly, in relation to a disposition by a person by which he acquires a settlement power1 for consideration in money or money's worth, the following anti-avoidance provisions apply:

  1.  

    •     the commercial transactions exception (I3.141–I3.148)2 is excluded from applying3

  2.  

    •     the person making the disposition is taken to have made a transfer of value, and that the value

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