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HMRC internal manual

Capital Gains Manual

Separate settlements: Board's Statement of Practice: SP7 84

SP7/84On 11 October 1984, the Board published a Statement of Practice, SP7/1984, replacing SP9/1981, the substance of which is as follows: -

a) In deciding whether or not a new settlement has been created, each case must be considered on its own facts and by applying established legal doctrine to the facts in a common sense manner. The consideration of the facts must include examination of the powers which the trustees purported to exercise and determination of the intention of the parties, viewed objectively.
b) A deemed disposal under Section 71(1), cannot arise unless the power exercised by the trustees confers on the trustees expressly or by necessary implication authority to remove assets from the original settlement by subjecting them to the trusts of a different settlement - such a power was referred to by the Court of Appeal in Bond v Pickford as being `in the wider form’.
c) When a power `in the wider form’ is exercised, a deemed disposal under Section 71(1) cannot arise if the appointment is revocable or the trusts declared in exercise of the power are not exhaustive (for example where there is a possibility of reversion to the original trusts on the failure of a contingent interest).
d) When a power `in the wider form’ is exercised, a deemed disposal under Section 71(1) is unlikely if duties in regard to the appointed assets still fall to the trustees of the original settlement in their capacity as trustees of that settlement.
(Note. A single settlement can have more than one set of trustees but TCGA92/S69 (3) requires them to be treated as a single body, see CG33340; on the other hand, if there is a separate settlement, TCGA92/S69 (1) requires the trustees to be treated as a separate body.)
e) The guidelines above should be followed whether the appointment, etc, extends to the whole or only to part of the settled property.