Record The Gifts And Loans
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03 June 2013
recent case Silber
has highlighted the need to evidence all gifts and loans and make it
whether the transaction is a gift or a loan. This case has highlighted
position on loans at the same time that the Finance Act 2013 tries to
‘aggressive’ tax planning through loan allocation.
many farming families there can be confusion
between who actually owns what farmland between family members. There
be misinterpretation and uncertainty over gifts and loans between
members and trading operations.
Mrs G Silber
(personal representative of the estate of Mr M Lerner deceased) (TC2369)
there was debate over the evidence regarding a loan which was reported
to be a
gift. The deceased Mr M Lerner died in 1999 at which time he owned the
share capital in Towvale Ltd, an unquoted company. Before Mr Lerner
made a loan of £107,210 to the company. The appellant (the personal
representative of the deceased’s estate) reported that the £107,210
form part of the estate because it had been a gift, rather than a loan.
therefore did not form part of the estate and was not liable to
argued that the gift was a loan. There was no
evidence that the transaction had been a gift. For example it was shown
company accounts as an amount due to a creditor, ie the deceased, and
the loan was liable to inheritance tax (IHT). The taxpayer lost their
showing the need to record, document and evidence gifts and loans.
can be huge IHT advantages of a transaction
being treated as a gift as opposed to a loan provided the donor
years (or a “sliding scale” thereof). There have been attempts at
“manipulation” by taxpayers to achieve an IHT advantage which could
come in to
consideration in order to maximise tax efficiency.
2013 Budget proposed changes to IHT re allocation
rules for liabilities in an individual’s estate that are likely to
in July. The four new sections broadly take effect to limit the relief
debts in the estate of individuals where these liabilities have been
in specific circumstances. IHT is chargeable on the net value of an
individual’s estate, after taking account of any debts or liabilities.
162B ‘Liabilities attributable to financing certain relievable
basic IHT planning of securing borrowings against non-business assets
be caught under this section.
evidence in such cases is essential; indirect
evidence though, for example, how the monies are shown in the farm
practical point is for advisers to ask questions and
obtain written information about the movement of monies within a family
The availability of signed documentation for loans and gifts is key but
important that this is correctly reflected in contemporaneous
About the Author
Supplied by Julie
F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire,
Tel: 01962 735544. Email; email@example.com,
the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine
ISBN: 0406966540, and Stanley: Taxation
of Farmers and Landowners (LexisNexis).
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Article Published/Sorted/Amended on Scopulus 2013-11-18 09:08:15 in Tax Articles