Future challenges to family investment companies

A freedom of information request recently revealed that in April 2019 HMRC set up a ‘secret unit’ to look at how family investment companies (FICs) are being used in inheritance tax planning. It is no surprise that HMRC is looking closely at these structures which are fast becoming the wealth holding vehicle of choice for many UK-based high-net-worth families but it reminds us that we should continue to look critically at the technical basis on which many of the benefits are founded.

It is important to consider what challenges HMRC may mount against any planning. While unable to predict these we can ensure that planning undertaken now is robust and that clients understand the risk and effect of possible legislation changes.

To do so let’s consider what benefits FICs bring in relation to inheritance tax and at how these may be at...