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The settlor who was 90 years old and in poor health bought an estate planning bond from AXA in 2002.
She paid £73 000 for the bond which she transferred to a trust.
Under the terms of the trust she was paid £300 a month in her lifetime. She died shortly after taking out the bond.
The question arose as to the value of the transfer calculated on the price paid for the bond less the right to monthly payments.
HMRC claimed that in the real world there would not have been a buyer for the right to the monthly payment given the settlor’s age and health.
Therefore a nominal figure should be attributed to the value of the rights and fixed upon £250.
The settlors appealed to the Special Commissioners.
The commissioner concluded that the right to the monthly payment was worth...
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