General outline: ‘charitable status’ and date for determining status
It is a function of the Courts, the Charity Commission and HMRC Charities to determine the charitable status of a body. If you need to determine the charitable status of a body which has not previously been considered by the Charity Commission or HMRC Charities, the case should be referred to Technical.
As a general rule the beneficiary needs to have charitable status at the date of transfer for the exemption to apply. But, a beneficiary who appears to be given charitable status after the date of transfer may qualify for exemption, if:
- the charity was not previously registered with the Charity Commission but applied to register as a result of the legacy, or
- the deceased’s will creates a charitable trust, or
- the deeming provisions of IHTA84/S142 or IHTA84/S144 apply because of a instrument of variation (IHTM35011) or a qualifying distribution (IHTM35181) from a discretionary trust.
Tanya dies in December 2010.
A local sports club which has existed for several years applies in August 2011 under FA02/S.58 Sch 18 to become a Community Amateur Sports Club (which gives it charitable status for tax purposes).
A legacy by Tanya to that club is not exempt in December 2010
But if in, say, November 2011 the residuary beneficiary under Tanya’s Will makes an instrument of variation (to which IHTA84/S142 (1) applies) that benefits the club, the charity exemption will apply.
Generally, you do not need to check that the beneficiary had charitable status at the date of the transfer. You only need to check this if you have good reason to believe the beneficiary was not a charity at the relevant date. If this is the case you should refer the file with an explanatory note to Technical (IHTM11125).