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HMRC internal manual

Inheritance Tax Manual

Interests in possession: powers of accumulation

Where there is a power of accumulation capable of being exercised, its very existence is sufficient to negate any interest in possession. This is one limb of the Pearson case where it was held that such a power may be said to arise and affect the trust income ‘at source’.

Very broadly, the accumulation power has priority over the provision that appears to give the interest in possession and such a trust will be non-interest in possession.