More tax engineering

I am concerned about the inheritance tax implications of Kevin Slevin’s example Bright Ideas in his article Tax engineering.

Just to recap Clive’s parents each own 35% of the shares in their company Bright Ideas Ltd while Clive owns the other 30%.

Clive is not an officer or employee of the company and makes an outright gift of the shares to his parents and holds over the gain under TCGA 1992 s 165. His parents will claim entrepreneurs’ relief on the subsequent sale of the shares.

What should not be forgotten here is that Clive would be making a potentially exempt transfer of some £3m that as at the date of the gift would benefit from business property relief.

However should Clive die within seven years...