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HMRC internal manual

Inheritance Tax Manual

Trust created by a variation: procedure when a trust is created

Where the IoV creates a trust, you should follow the normal procedures in deciding whether or not you can accept the instrument as meeting the conditions of IHTA84/S142. Where you decide that you can, you should consider whether

  • a future claim needs to be recorded (IHTM39011), and
  • the issue of form Lit.1, if required, as part of our liaison procedures with the Trust Districts (IHTM09230).

When you complete the form Lit1 you should bear in mind that, for Income tax purposes, Trusts treat the person disposing of the benefit as the settlor. They will treat the date of the IOV as date the settlement began. We explain how we treat this for IHT purposes at IHTM35151 and IHTM42228