IHTA84/S3A (3) provided that Potentially Exempt Transfer
(PET) (
IHTM14024) treatment for such payments
before 22 March 2006 is only available to the extent that the value
transferred is attributable to property which, by virtue of the
transfer, becomes settled property (
IHTM16000) to which IHTA84/S71 or
IHTA84/S89 applies. If a transferor put a policy into an
accumulation and maintenance trust or a disabled trust and then
paid the renewal premiums direct to the insurance company before 22
March 2006, PET treatment will therefore not be available. This is
because the premiums as such do not become settled property. That
remains the position for disabled trusts where premiums are paid in
this way on or after 22 March 2006, S3A (3A).
However, if the transferor made payments to the trustees
before 22 March 2006 (and also on or after that date in the case of
disabled trusts) and they used those payments to pay the renewal
premiums PET treatment is available - even if payment by the
transferor was by a cheque which the trustees endorsed in favour of
the insurance company. Neither the associated operations provisions
nor the principle in Ramsey/Furniss should be invoked to deny PET
treatment in these cases.
S71 cannot apply to property settled on or after 22 March
2006 (IHTA84/S71 (1A)) except in specific circumstances where
rights under a contract of life insurance were settled on
accumulation and maintenance trusts (
IHTM42807) prior to 22 March 2006, but
premiums continue to be paid after that date and further rights
become comprised in the settlement as a result. In those
circumstances, the payment of premiums on or after 22 March 2006
will continue to be treated as potentially exempt transfers if they
are made by an individual, S46B(5) (
IHTM20202), whether the payment is made
direct to the insurance company or to the trustees in the first
place, who use it to pay the premiums. In the latter case, we can
agree that the two payments could be regarded as together
comprising a disposition by the transferor by associated operations
(
IHTM14821) which is to be treated as a
transfer of value under S3.
