Regulation 7 Double Charges—chargeable transfers and death

(1)

This regulation applies in the circumstances specified (by this regulation) for the purposes of paragraph (d) of section 104(1) of the 1986 Act (being circumstances which appear to the Board to be similar to those referred to in paragraphs (a) to (c) of that subsection) where the conditions (“specified conditions”) of paragraph (2) are fulfilled.

(2)

The specified conditions to which paragraph (1) refers are—

(a)

an individual (“the deceased”) makes a transfer of value to a person (“the transferee”) which is a chargeable transfer,

(b)

the transfer is made on or after 18th March 1986,

(c)

the deceased dies within 7 years after that chargeable transfer is made, and

(d)

the deceased immediately before his death was beneficially entitled to property to which paragraph (3) refers.

(3)

The property to which paragraph (2)(d) refers is property—

(a)

which the deceased, after making the chargeable transfer to which paragraph (2)(a) refers, acquired from the transferee otherwise than for full consideration in money or money’s worth,

(b)

which was transferred to the transferee by the chargeable transfer to which paragraph (2)(a) refers or which is property directly or indirectly representing that property, and

(c)

which is property comprised in the estate of the deceased immediately before his death (within the meaning of section 5(1)), value attributable to which is transferred by a chargeable transfer (under section 4).

(4)

Where the specified conditions are fulfilled there shall be calculated, separately in accordance with sub-paragraphs (a) and (b), the total tax chargeable as a consequence of the death of the deceased—

(a)

disregarding so much of the value transferred by the chargeable transfer to which paragraph (2)(a) refers as is attributable to the property, value of which is transferred by the chargeable transfer to which paragraph (3)(c) refers, and

(b)

disregarding so much of the value transferred by the chargeable transfer to which paragraph (3)(c) refers as is attributable to the property, value of which is transferred by the chargeable transfer to which paragraph (2)(a) refers.

(5)

(a)

Whichever of the two amounts of tax calculated under paragraph (4)(a) or (b) is the lower amount shall be treated as reduced to nil but, subject to sub-paragraph (b), the higher amount shall be payable,

(b)

where the amount calculated under paragraph (4)(a) is higher than the amount calculated under paragraph (4)(b)—

(i)

only so much of that higher amount shall be payable as remains after deducting, as a credit, from the amount comprised in that higher amount which is attributable to the value of the property to which paragraph (2)(d) refers, a sum (not exceeding the amount so attributable) equal to so much of the tax paid—

(a)

as became payable before the death of the deceased, and

(b)

as is attributable to the value disregarded under paragraph (4)(a), and

(ii)

so much of the value transferred by the chargeable transfer to which paragraph (2)(a) refers as is attributable to the property to which paragraph (3)(c) refers shall (except for the purposes of an occasion which occurred before the death of the deceased on which tax was chargeable under section 64 or 65) be treated as reduced to a nil amount for all the purposes of the 1984 Act.

(6)

Part IV of the Schedule to these Regulations provides an example of the operation of this regulation.