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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Foreign property: discretionary trusts and exempt securities: anti-avoidance rules

IHTA84/S48 (5) relates to switching settlements. There are special rules for property that has moved between settlements without having passed through someone’s beneficial (here meaning outright or absolute) ownership.

The rules are designed to deter people from avoiding tax by transferring property from one settlement where the beneficiaries are resident or domiciled in the UK, into a sub-settlement where the beneficiaries are all abroad.

The rules effectively deny the exclusion for exempt securities unless the conditions for the exclusion are satisfied for all the settlements involved. The rules apply:

  • where, by the same disposition, property has moved from one settlement into another before 10 December 1981 and after 19 April 1978, or
  • where property moves between settlements after 9 December 1981 without any person having in the meantime become absolutely entitled to the property.