Exempt gift

The deceased who was unmarried and had no children lived with her blind and frail mother. She owned two investment properties. In 2003 after being diagnosed with terminal cancer she transferred the two properties to her mother. She died in 2005 and the mother died in 2007.

HMRC determined that the gifts of houses were chargeable gifts under IHTA 1984 s 3A(4). The deceased's executors appealed saying the properties had been gifted to the mother in order to pay for her future care and were therefore exempt under s 11(3). The fact that they had not been used for that purpose was not relevant.

The Special Commissioner said that it was necessary to decide what was reasonable at the time of the gift being made rather than what happened afterwards. On the facts it was reasonable to conclude that when the gifts were made...