188体育

Calculating the chargeable value of the property (or part):

A close company has assets in excess of 拢3million. It transfers cash of 拢1million to A and B absolutely.

The company has 1000 shares in issue.

The 鈥榩articipators鈥� are identified under IHTA84/S94 (2). They are:

A - who holds 500 shares

B - who holds 250 shares, and

C - who holds 250 shares in his capacity as a trustee of a settlement. IHTA84/S99 (1)(a) causes S94 (2) to apply to him.

The transferred amount of 拢1,000,000 is apportioned so that A is deemed to have made a transfer of value of (500 梅 1,000) x 拢1,000,000 = 拢500,000.

From this figure we must deduct the amount of the transfer remaining in A鈥檚 estate (鈥榯he amount by which his estate is more than it would be apart for the company鈥檚 transfer鈥� - S94(1)(a)). In this case he has accepted the money. His estate is 鈥榤ore鈥� by 拢500,000. So the taxable amount is 拢500,000 less 拢500,000 equals nil.

As B is also an individual and has taken the money personally, his calculation follows the same lines.

But C is also a participator, and (250 / 1,000) x 拢1m is apportioned to him under S99(1)(a) i.e. 拢250,000.

The amount to be taxed in relation to C under S99 (2) is 拢250,000 less the amount by which the settlement in question is 鈥榤ore鈥� as a result of the company鈥檚 transfer - S99 (3).

Thus, as C and his settlement received nothing, the calculation is 拢250,000 less nil =拢250,000 chargeable under S99 (2) above.

The last part of S99 (3) 鈥榣eaving out of account the value of any rights or interests in the company鈥� means that the calculation stops here. S99 (3) prohibits the taking into account of the effects of these transactions by the company on the value of the shares (rights or interests), for example, the value of rights and interests still held by the shareholders as such could nullify the effect of all these provisions if that value were allowed into the above equation

Also, if a company worth 拢3million gives away 拢1million as above, the thought might reasonably occur that the value of shares held by the shareholders personally has possibly dropped by about one-third. You might then wonder about 鈥榣oss to the transferor鈥�. You must put such thoughts out of your mind because such a claim does not exist.