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HMRC internal manual

Inheritance Tax Manual

Published guidelines: Statement of Intent must be included where instrument executed on or after 1 August 2002

Instruments executed on or after 1 August 2002 must contain a valid statement of intent, under IHTA84/S142(2) as amended by FA2002/S120 (1), that the provisions of IHTA84/S142 (1) shall apply to the variation.  If the instrument does not contain such a statement it is ineffective for the purposes of IHTA84/S142 (1).

The statement must include the appropriate statutory references.  The example given in the notes to the instrument of variation checklist (IOV2) is

“The parties to this variation intend that the provisions of section 142(1) Inheritance Tax Act 1984 and section 62(6) Taxation of Chargeable Gains Act 1992 shall apply”.

In announcing the revised provisions, however, we stated in Tax Bulletin 60, August 2002:

“…although if an IoV follows old drafting precedents and refers to an election, this would be regarded as a statement of the parties’ intent.”

So any instruments executed on or after 1 August 2002 which incorporate wording following the format of the notice of election or referring to an election should be accepted as a valid statement of intent.

You should refer any case where the taxpayers assert that IHTA84/S142 (1) applies but the instrument does not incorporate a statement of intent to Technical.