IHTM28052 - Investigating liabilities: annuitant can insist that capital is set aside to meet the annuity
If the taxpayers can establish that the annuitant could have insisted on capital being set aside to meet the annuity you should accept that:
- The annuitant had an interest in possession in the slice of the property required to support the annuity.
- The deceased’s or transferor’s interest in that slice is treated as a reversionary interest, so it is excluded property (IHTM04285), IHTA84/S48.
- The deceased or transferor had an interest in possession in any part of the property not required to support the annuity.
You should calculate the value of the deceased or transferor’s slice by following the instructions at IHTM16212.
This view is supported by the cases of Re Holliday, Houghton v Adlard  Ch 402 and A.G. v Lane Fox  2 KB 498.