Has someone ceased to occupy his or her main residence and,
if so, was this to be tested by intention or by physical fact?
(Where the person became beneficially entitled to the
interest in possession, on or after 22 March 2006, this will only
be relevant (
IHTM16131) if it is an immediate
post-death interest, a disabled person’s interest or a
transitional serial interest (
IHTM16061)).
For example -
a person with a right of occupation ‘so long as he
shall desire’ is on holiday and becomes seriously ill. He
loses his mental capacity to make a decision and dies a month
later. Does his interest in possession continue until his death?
This can give rise to practical problems, which you will need
to consider when establishing what the IHT claim is, because if the
interest has ceased in lifetime -
a IHTA84/S52 (1) claim will often be covered by the nil -
rate band, thus throwing the entire burden of tax onto the free
estate (as in the Watkins case).
If the person inheriting the house is different from the
person taking under the occupant’s will, there is clearly a
conflict of interest and inter - family disputes can arise.
If the tax at stake warrants an investigation into this point
and there is doubt as to when the interest in possession ceased
after you have obtained the background facts, you should refer to
Technical Group for advice.
