»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp X Investment Company Ltd has assets of £5million and issued share capital of 1,000 ‘Aâ€� ordinary shares and 1,000 ‘Bâ€� ordinary shares. All shares have one vote each.

On 24 October 2003 the directors resolved to increase the A share votes to two votes each.

»Ê¹ÚÌåÓýapp participators at 24 October 2003 are

Mr X = 400 A shares

Mr X junior = 400 A shares

»Ê¹ÚÌåÓýapp X Family Settlement = 200 A shares & 1,000 B shares

Mr X - no tax payable - the value going into his estate is higher than the value of the disposition - IHTA84/S94 (1).

Ditto Mr X junior.

Miss X has an interest in possession in the whole funds of the X Family Settlement: IHTA84/S100 looks through the trustee to take her as deemed transferor at the time of the alteration.

»Ê¹ÚÌåÓýapp Family Settlement had operating control of the company with 1,200 votes. After the re- arrangement it had 1,400 votes out of 3,000 and had lost control.

If the value of the shares with day to day control is taken as £y, then the value after the change of rights might be £z. »Ê¹ÚÌåÓýapp difference between the two figures is the chargeable ‘relevant decrease of the value of the property in which the interest subsistsâ€� under IHTA84/S100 (2) and that is the amount chargeable under IHTA84/S52(1).

As with other claims on an interest in possession coming to an end, this will be a potentially exempt transfer (PET) (IHTM04057) if it qualifies in the ordinary way.

However, there is the prospect that the value underlying a claim like this could fall into a non-interest in possession settlement (or a non-interest in possession fund of the same settlement) and that would make it immediately chargeable.