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HMRC internal manual

Capital Gains Manual

Death of person with interest in possession in part: special treatment

Where trustees wish to identify particular assets as ‘the corresponding part’, asdescribed in the preceding three paragraphs, a list of the assets identified should beagreed with the trustees. Normally, the trustees’ statement that certain assets have beenreleased or appropriated should be accepted for this purpose unless there is clearevidence which is inconsistent with such a statement. It should be made clear that theidentification of the assets is binding on both HMRC and the trustees. In the unlikelyevent of trustees attempting to put forward a different analysis on a later occasion, itshould be strenuously resisted. It is also important to specify the assets concernedbecause of the possibility of a charge arising under TCGA92/S74 (1), where a chargeablegain has previously been held over, see CG36510.

For the purposes of CG36478 - CG36481, in deciding whether the trustees have taken theirdecision to appropriate within a reasonable time, the most important consideration is thetime needed to prepare valuations for the purposes of the division and, if appropriate,Inheritance Tax. A period of three months or less from the death of the beneficiary shouldalways be regarded as reasonable.