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HMRC internal manual

Inheritance Tax Manual

Excepted assets: Future use

The future use test was considered in Barclays Bank Trust Co Ltd v CIR SpC 158. The Special Commissioner posed the question as follows, at para 10 of his decision

“Was the £300,000 cash held by the company required on 23 November 1990 for future use for the purposes of the business? This is a question of fact and on the evidence before me I cannot find that it was so required. I do not accept that ‘future’ means at any time in the future nor that ‘was required’ includes the possibility that the money might be required should an opportunity arise to make use of the money in two, three or seven years’ time for the purposes of the business. In my opinion and I so hold that ‘required’ implies some imperative that the money will fall to be used upon a given project or for some palpable business purpose.”

Whether this test is satisfied is a question of evidence in the circumstances of the particular case. You need to consider the nature and previous history of the business and such evidence as may be produced (which may incidentally affect the open market value of the business) as to prospective development and capital outlay. In particular, the extent to which cash, bank accounts, building society accounts and similar assets included in the accounts of a business may be excepted assets should always be examined carefully.