“10. - Dispositions not intended to confer gratuitous benefit (1) A disposition is not a transfer of value if it is shown that it was not intended, and was not made in a transaction intended, to confer any gratuitous benefit on any person and either - (a) that it was made in a transaction at arm’s length between persons not connected with each other, or (b) that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other. (2) [not relevant; concerns sales of certain shares/debentures] (3) In this section - ‘disposition’ includes anything treated as a disposition by virtue of section 3(3) above; ‘transaction’ includes a series of transactions and any associated operations.” (a) that it was made in a transaction at arm’s length between persons not connected with each other, or (b) that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other. ‘disposition’ includes anything treated as a disposition by virtue of section 3(3) above; ‘transaction’ includes a series of transactions and any associated operations.”
“1. A Transfer-In Application Form for the transfer of pension funds from an AXA Flexible Transfer Plan (a section 32 buyout policy) … to an AXA Personal Pension Plan … (‘the new pension scheme’) signed by the deceased on3 November 2006 .”
“A. The transfer at (1) above is a disposition which is a transfer of value having regard tosection 3(1) Inheritance Tax Act 1984 (‘IHTA’).”
“C. The deceased omitted to exercise her right to take any benefits from the new pension scheme between the date of commencement of the new pension scheme and the date of her death. D. The omission at C above is treated as a disposition by the deceased at the latest time when she could have exercised her rights and is a transfer of value having regard to section 3(3) and (1) IHTA.”
“50. HMRC say that, even ignoring the IHT, she clearly had an intent that the death benefits would pass to her sons, and this was an intent to confer a gratuitous benefit. She signed the statement of wishes. However, we do not see how this could be properly described as an intention to confer a gratuitous benefit. Her sons were her beneficiaries named in her will and therefore the persons who had stood to benefit from the death benefits of the section 32 policy (which after April 2006 would have been the whole fund). They were the persons named in her expression of wishes for the PPP. Either way they were the intended beneficiaries so that the transfer did not confer a benefit that was new to them and cannot therefore have been part of the motivation for Mrs Staveley.” (Emphasis in the original)
“the transfer to the PPP was not made with the intent of omitting to take lifetime benefits. In so far as Mrs Staveley made any positive decision not to take lifetime benefits, that decision had already been taken and taken independently of the decision to transfer the funds to the PPP.” (Emphasis in the original)
“To the extent that the FTT was in error in deciding that the replacement of the testamentary benefit to the sons by the benefit conferred as beneficial objects of the discretion of the scheme administrator of the AXA PPP could not in law amount to the conferring of a benefit, that was not the basis for the FTT’s conclusion as to the sole motive of Mrs Staveley. That was a decision of the FTT on the facts, which properly included the nature of the benefit in question.”
“‘Confer’ is defined in the Concise Oxford Dictionary as ‘to grant or bestow’, ‘benefit’ as ‘a favourable or helpful factor or circumstance; advantage, profit’. In enacting section 10, parliament will, I think, have been concerned to exclude from the crucial exemption for which it provides a disposition which was itself intended to ‘grant or bestow’ something advantageous gratuitously. Parliament considered that an arm’s length transaction should not generally give rise to an IHT charge even if it served to diminish the value of the transferor’s estate, but did not want the exemption to apply if - to put matters broadly - the disposition was being used to improve someone’s position on a gratuitous basis. As a matter of language, I do not think that it is appropriate to speak of a disposition having been ‘intended’ ‘to confer any gratuitous benefit’ if the recipient of the ‘benefit’ was intended to receive no more than he would have had in any event. A disposition designed to give a person only what he was to receive anyway or its equivalent, let alone less, cannot fairly be described, in my view, as intended to ‘confer’ a ‘benefit’.”
“It is not apparent to me that HMRC have ever advanced a case to that effect, let alone that the FTT made findings supporting it, and (aside, again, from IHT) I do not regard it as in the least obvious that the sons were in practice any better placed as a result of the transfer.”
“… it may be said that there was an absence of intention to confer a new benefit. Mrs Staveley was, after all, (it may be said) only giving her sons what she had previously intended to give them under her will. She was (it may be said) just making the same gift in a new way. But what the FTT found was that there was a gratuitous intention in signing the nomination. So, in my judgment, on the facts of this case, the respondents had to show that, even though it was a gratuitous intention to confer what in law was a newly created right, it was not Mrs Staveley’s intention to confer such a benefit: see the words ‘if it is shown that it was not intended’ appearing in section 10(1). An absence of evidence as to whether she intended to make a newly conferred gift is not enough. The respondents needed to show that she mistakenly thought that she was not conferring a newly created right, and the findings of the FTT do not go that far.”
“While, therefore, Mrs Staveley did not see the transfer to the PPP as improving her sons’ position and she made the transfer out of a desire to sever ties with Morayford, the only reasonable conclusion, as it seems to me, is that she also intended the PPP to be a means by which the death benefits could be passed to her sons.”
“The sons’ estates would not, of course, have been … increased but for the omission. Moreover, the exercise of discretion in the sons’ favour by the scheme administrator did not … involve any break in the chain of causation. The administrator was, after all, doing no more than it was obliged and could be expected to do in the period immediately following Mrs Staveley’s death. It may be that the increase in the sons’ estates could also be said to have been brought about ‘by’ the exercise of the administrator’s discretion, but that by no means makes it inappropriate to see the estates as having been increased ‘by’ the omission. The one does not preclude the other.”
“On its ordinary meaning, a benefit involves a net gain or favourable change in a person’s position, but the comparison to be made is with his position immediately before the putative benefit was conferred. This is the most natural time to determine the question of benefit and in my judgment there would need to be some mandate in the 1984 Act to do what the FTT did, which was to look at the position in substance before the transfer took place and without reference to its legal analysis. I do not consider that there is any such mandate. The interest of the sons under the nomination was undoubtedly a favourable change from their previous position under Mrs Staveley’s will if regard is had to the legal analysis. The interpretation of ‘confers any gratuitous benefit’ which I prefer gives weight and appropriate meaning to the statutory words.”
“There is no limitation on the type of benefit and there is no requirement for the gratuitous benefit to be conferred on the recipient of the property transferred by the disposition. It can be conferred on any person. It must be of some value, but that value need not be the same as the value of the property transferred.”
“It further appears from paragraph 17 of the affidavit of the trust solicitor that for reasons which it is not necessary to consider, the trustees: ‘came to the conclusion that they ought not to exercise their power of appointment so as to give Mr David Robarts’ eldest son Timothy an interest in possession in the settled pictures unless the terms of the 1970 custody agreement were first reviewed and varied, since Mr David Robarts was not willing to continue, after such an appointment, to house the pictures on the terms of the 1970 custody agreement in its original form’.” ‘came to the conclusion that they ought not to exercise their power of appointment so as to give Mr David Robarts’ eldest son Timothy an interest in possession in the settled pictures unless the terms of the 1970 custody agreement were first reviewed and varied, since Mr David Robarts was not willing to continue, after such an appointment, to house the pictures on the terms of the 1970 custody agreement in its original form’.”
“Counsel for the Crown contended that as a matter of law the transaction which had to be looked at in section 20(4) was one which included a series of transactions and associated operations and that as matter of fact the disposition, being the 1977 agreement, was made in such a transaction. Counsel accepted that the terms of paragraph 17 of the affidavit of the trust solicitor … were essential to the factual part of this proposition.”
“two types of situation in which a disposition may not be a transfer of value, namely: (1) where the disposition stood alone and was not intended to confer any gratuitous benefit, and (2) where the disposition was not made in a transaction intended to confer any gratuitous benefit.”
“In the second case the disposition would form one of a number of events of which the sum constituted the transaction which was relevant to intent. There is nothing in … section 20(4) to require that the event, to use a neutral word, which results in the devaluation of the settled property must be looked at in isolation from all other events for the purposes of the subsection. If an individual took steps which devalued his property on Monday with a view to making a gift thereof on Tuesday he would fail to satisfy the requirements of section 20(4) because the act of devaluation and the gift would be considered together. If trustees in the circumstances envisaged in paragraph 6(3) took steps which devalued the settled property with the object of making subsequent distributions thereof why should the two events be considered as independent of one another? Neither law nor logic would suggest that they should.”
“If the extended meaning of ‘transaction’ is read into the opening words of section 20(4) the wording becomes: ‘A disposition is not a transfer of value if it is shown that it was not intended, and was not made in a transaction including a series of transactions and any associated operations intended, to confer any gratuitous benefit …’ So read it is clear that the intention to confer gratuitous benefit qualifies both transactions and associated operations. If an associated operation is not intended to confer such a benefit it is not relevant for the purpose of the subsection. That is not to say that it must necessarily per se confer a benefit but it must form a part of and contribute to a scheme which does confer such a benefit. In this case it is common ground that the appointment conferred a gratuitous benefit on Timothy. It is clear … that the appointment would not have been made if the 1970 agreement had not been varied by that of 1977. It follows that the 1977 agreement was not only effected with reference to the appointment but was a contributory part of the scheme to confer a benefit on Timothy. So viewed there can be no doubt that the 1977 agreement, being the disposition for the purposes of section 20(4), was made in a transaction, consisting of the agreement and the appointment, intended to confer a gratuitous benefit on Timothy.” (Emphasis added)