Close companies and settled property: how to investigate
You should consider the following points:
- Is there an indication of a transfer of value or an alteration of rights by a close company (IHTM14851)?
- Who are the participators?
- Ascertain the value transferred.
- Apportion the value to them.
- Calculate the net taxable value, deducting the ‘amount specified’ under IHTA84/S99 (2) with IHTA84/S99 (3) as necessary.
Once you know the net value, you simply proceed as normal for the type of trust concerned.
You should also ensure that the taxpayer is aware of the position.
The first four points on the above list are the responsibility of Shares and Assets Valuation (SAV), but the compliance caseworker must be ready to offer help, especially on further analysis of the trusts if necessary. It is essential to refer these cases to SV as soon as possible. You may need to provide them with a brief summary of the relevant trusts or possible outcomes. A meeting with SV is strongly recommended in all cases.
Consider whether a company has an interest in possession and raise the point with SV as the position might be clearer to them.