Citation, commencement and interpretation

1. —(1) These Regulations may be cited as the Inheritance Tax (Double Charges Relief) Regulations 2005, and shall come into force on 4th January 2006.

(2) In these Regulations—

“the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;

“the debt” means the debt mentioned in regulation 3(2);

“the relevant property” has the meaning given in regulation 3(6).

General

2. —(1) These Regulations apply in the circumstances specified in regulation 3.

(2) They apply for the purposes of paragraph (d) of section 104(1) of the Finance Act 1986(which refers to circumstances appearing to the Commissioners to be circumstances similar to those referred to in paragraphs (a) to (c) of that provision).

(3) To the extent specified in regulation 4, these Regulations apply for the avoidance of double charges to tax.

Circumstances in which these Regulations apply

3. —(1) These Regulations apply where conditions A to D are met.

(2) Condition A is that an individual (“the deceased”) enters into arrangements (“the arrangements”) under which—

(a) the disposal condition or the contribution condition is met as respects the relevant property, and

(b) the deceased makes a transfer of value as a result of which a third party becomes entitled to the benefit of a debt (“the debt”) owed to the deceased.

(3) Condition B is that, before the deceased’s death, any outstanding part of the debt is wholly written off, waived or released, and the write-off, waiver or release is made otherwise than for full consideration in money or money’s worth.

(4) Condition C is that the deceased dies on or after 6th April 2005.

(5) Condition D is that—

(a) on the deceased’s death, the transfer of value treated as made immediately before the deceased’s death included the relevant property (or any property then representing the relevant property), and

(b) as a result of the deceased’s death, the transfer of value referred to in paragraph (2)(b) has become a chargeable transfer.

(6) In these Regulations “the relevant property” means property which, immediately after the carrying out of the arrangements, falls within the definition of “the relevant property” given in paragraph 11(9) of Schedule 15 to the Finance Act 2004( 3 ).

(7) In paragraph (2)(a) “the disposal condition” and “the contribution condition” are to be construed in accordance with Schedule 15 to the Finance Act 2004.

Avoidance of double charge: amounts to be calculated

4. —(1) Where these Regulations apply, amounts A and B must be calculated separately.

(2) Amount A is the total tax chargeable as a consequence of the death of the deceased, but disregarding the value transferred represented by the relevant property (or by any property which, at the time of the death, represents the relevant property).

(3) Amount B is the total tax chargeable as a consequence of the death of the deceased, but disregarding the value transferred by the transfer of value specified in regulation 3(2)(b).

(4) The total tax chargeable is reduced to amount A or to amount B (whichever is the greater).