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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Foreign property: specific British Government Securities: close company with an interest in possession

Under IHTA84/S101 and IHTA84/S102 (1) for the purposes of IHT an interest in possession in settled property to which a close company is entitled is attributed to the participators in the company according to their respective rights and interests in the company. The exception to this is where IHTA84/S55 relating to the purchase of a reversionary interest applies,

Where the company became beneficially entitled to the interest in possession on or after 22 March 2006, this applies only if the interest is an immediate post-death interest (IHTM16061) or a transitional serial interest, S101(1A) (IHTM16061)

When you are dealing with exempt securities comprised in a settlement that gives an interest in possession in those securities to a company, you must ask Shares and Assets Valuation (SAV) to find out whether the company is a close company (IHTM04068). If the company is a close company the participators must satisfy the particular condition specified by the securities (IHTM27241) and not the company itself. If you are unsure or encounter problems you must seek advice from Technical, especially if the participators are (or include) the trustees of another settlement.