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Tax crops up when you least expect it. Last week I was watching the new film ‘Allelujah’, set in a nursing home when, out of the blue, inheritance tax popped up as a plot device. Without giving away the story, the date of a character’s death suddenly became an issue because it was getting near to the seventh anniversary of a gift she had made. The script writers took liberties because they didn’t consider the impact of the gift with reservation rules or taper relief, but stopping the film in the middle for a ten-minute tax lecture might have harmed its audience figures, at least among those who don’t subscribe to this magazine. Certainly my partner seemed less than enthusiastic when I started to talk to her about the tax technical shortcomings in the script while she was trying to watch the rest of the film.
This got me thinking about other circumstances where the date of death is important. I’ve mentioned Tim Harford’s research Cheating death (tinyurl.com/timharfordcd) which shows that in the days before the abolition of estate taxes in Australia the death rate plummeted, only to rise markedly in the days after the new rule came into force.
But perhaps the most bizarre is the tax scheme which was linked to the death of General Franco (Trustees of Sir John Aird’s Settlement [1983] STC 700). The problem was that General Franco was taking a very long time to die and the scheme needed to have an alternative death in case he remained alive too long.
Ultimately the scheme failed, but it is perhaps a good illustration that the old saying about nothing being certain other than death and taxes is not always true.
If you do one thing...
See HMRC’s updated guidance on the corporate interest restriction – tinyurl.com/hmrccfmup.
