Assignment of a reversionary interest was a transfer of value

The appeal concerned a widely used inheritance tax scheme involving the acquisition of a pre-existing excluded property trust in the Isle of Man.

In this instance the arrangements which took place in 2010 involved the assignment of the reversionary interest in an Isle of Man trust to PL who was then granted an option to become the income beneficiary of the trust. Before exercising the option PL transferred his reversionary interest to KTrust of which the taxpayers were trustees.

It was accepted that the arrangements were broadly the same as those considered by the First-tier Tribunal in Salinger (TC5407). In that case the taxpayer was successful but the tribunal in the instant case found the scheme had failed.

Here the tribunal said the PL had acquired the reversionary interest in the trust for a consideration which covered ‘the full package of rights and interests under...