Release of inter-company debt

IHTA 1984 s94?

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A and B companies owned 60/40 and 51/49 by persons 1 and 2. B owes A say £2m. Debt is to be written off.

No CT implications due to connected company status.

Question is: is IHTA 94 s94 in point? (value of 1's estate will fall whilst that of 2 will increase). If there is a s94 charge, is it based only on the value transferred out of A or do you look at the net position? It would be absurd to consider the former in my view, since that would also create a charge on 2 despite the fact that his estate has increased in value.

With thanks for the response below, s95 answers the second part of the question. But not the first - would the release of the debt be considered to be a transfer of value for s94?

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By Montrose
09th Mar 2018 10:21

How about s95?

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By Ruddles
09th Mar 2018 12:14

I would say that the cancellation of a debt falls within the wide definition of 'disposition'. As such, it falls within the definition of 'transfer of value' at IHTA 1994 s.3(1).

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