IHTM10831 - Settled property: general rules on accountability when there is a qualifying interest in possession
There are some special rules that apply when a qualifying interest in possession terminates
- on death (IHTM10832)
- during a lifetime (IHTM10833), or
- when there is an excepted termination (IHTM10834).
But generally the trustees, as the persons who are liable for tax under IHTA84/S201 (1)(a) or (1)(b) , are accountable for both transfers on death and lifetime transfers in relation to settled property of this kind, IHTA84/S216 (1)(b). The relevant form of account is the IHT100 and the normal time limits (IHTM10803) for delivering accounts apply.
Trustees cannot avoid the obligation to deliver an account by either living abroad or ceasing to be a trustee - CIR v Stype Trustees (Jersey) Ltd [1985] STC 394, CTT cases No27.
The trustees are required to account for the value transferred by a ‘transfer of value’. This means that in strictness trustees are obliged to account for exempt transfers as well as chargeable ones. But in practice you should not normally enforce this requirement if you are satisfied that the transfer is wholly exempt.