IHTM44109 - Pre-owned assets: specific avoidance schemes: chattels - gift and leaseback scheme
An alternative to the lease carve out scheme for chattels (IHTM44107) was for the individual to make a gift of the chattels and then lease them back from the new owner at a commercial rate. Subject to the rent being negotiated at arm’s length and following the normal commercial approach, the reservation of benefit provisions do not apply, FA86/Sch20/Para6(1)(a). Since such transactions are specifically excluded from the reservation of benefit conditions, the POA charge does not apply either, FA04/Sch15/Para11(5)(d), (IHTM44048).
Shares and Assets Valuation will advise on whether or not rent paid under a gift and leaseback arrangement may considered full consideration. In any case where it is not, a reservation of benefit will arise rather than the POA charge,