IHTM14828 - Lifetime transfers: associated operations: restrictions on which operations can be taken into account
Several operations (IHTM14826) may be associated under the definition in IHTA84/S268. However, as the decision of the House of Lords in Macpherson v IRC [1989] AC 159 (IHTM14829) made clear, it may not be possible to take all of those operations into account.
»Ê¹ÚÌåÓýapp decision in Macpherson established that only operations which together are relevant to the tax charge being considered are to be taken into account as associated operations.
As a result, when applying the associated operations rules you may only take account of operations
- which are ‘associated� within the statutory definition (IHTM14822), and
- which are relevant for the purposes of the tax charge that you are considering.
Whether any given associated operation is also a relevant operation will depend on the statutory context in which it is being considered. However an operation will usually be a relevant operation if
- it forms part of and
- contributes to
a scheme or plan which gives rise to the tax charge under consideration for IHT purposes.
Relevant operations
In the case of a transfer of value under IHTA84/S3 (1), every associated operation which contributes to the loss to the transferor’s estate (IHTM04054) is a relevant operation. Any other operation, although it may be ‘associated�, is not relevant for the purpose of that provision.
Example
So if Angus grants a lease to Brodie and then later gives him the freehold reversion, after which Brodie pays to have an extension built, all three operations are associated. »Ê¹ÚÌåÓýappy all affect the same property. But the only the first two operations are relevant to the transfer of value under IHTA84/S3(1), since the building of the extension by Brodie does not give rise to any further loss to Angus’s estate.