TC09557 - [2025] UKFTT 00750 (TC)

A number of grounds of appeal were raised, but by the time of the hearing Ms Tonkin wished to rely on just two, as follows:

The burden of proof is on Ms Tonkin to show that the notice of determination is incorrect. The standard of proof is the usual civil standard, being the balance of probabilities.

We have carefully considered the submissions and evidence of both parties, but have not found it necessary to refer to every argument and authority that was put to us, nor to describe every part of the evidence. 

So far as is relevant to this case, the effect of IHTA 1984, s 94 is that where a close company makes a transfer of value, inheritance tax is charged as if that transfer of value were made by the participators in that close company. For these purposes the value transferred is apportioned between the participators according to their respective rights and interests in the company. As a result of IHTA 1984, s 3A(6), this deemed transfer of value is not a potentially exempt transfer, but gives rise to an immediate charge to inheritance tax.

In this case, the Company is a close company, and Ms Tonkin is its sole participator. This means that if any apportionment falls to be made, the share of the transfer of value apportioned to her would be 100%.

S 94(2)(a) provides for an exception to this rule, in that no apportionment falls to be made in respect of so much of a transfer of value:

“as is attributable to any payment or transfer of assets to any person which falls to be taken into account in computing that person’s profits or gains or losses for the purposes of income tax or corporation tax”

We must therefore decide whether, assuming the Company made a transfer of value, this is attributable to a payment or transfer of assets which falls within the wording of s 94(2)(a).