CheckLists.Tax (beta)
C1. Gifts in general
Meaning of gift
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- Requires intention to give and acting on that intention
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- “The making of a gift is the act of the donor. It involves the donor in forming the intention to give and then acting on that intention by doing whatever it is necessary for him to do to transfer the relevant property to the donee.” (R v. Hinks; Pride, §108).
- No intentional undervalue where transfer of partnership capital share is commensurate with donee's contribution to partnership (IHTM14315).
- Evidence (preferably contemporaneous) must show that transaction was 'economic' to avoid gift (Pride §112 - 113).​
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Legislation:
Cases:
Pride v. HMRC [2023] UKFTT 316 (TC);
HMRC manuals:
Commentary:
See also:
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- Sale at undervalue​
- Purchase at undervalue involves an element of gift (Garnett, §91).
- Query to what extent the undervalue must be conscious/intentional.
- HMRC regard this as a gift of the proportion of the property reflecting the undervalue (IHTM14316).
- Query the position if the purchase price is left outstanding/paid in instalments.
- If an income producing asset is sold for an annuity equal to the income produced by the asset, HMRC say this not a sale at undervalue, but a gift of the asset and the reservation of a benefit in the shape of the annuity (IHTM14316).
Legislation:
Cases: Garnett v. Jones [2007] UKHL 35;
HMRC manuals: IHTM14316;
Commentary: McCutcheon 7-54;
See also:
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- Query whether a transaction for market value that reduces the transferor's estate is a gift
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- T may sell property for market value, but the effect may be to reduce the value of T's estate by more than the value of the item sold, e.g. assets that are worth more together.
Legislation:
Cases:
HMRC manuals:
Commentary: McCutcheon 7-49;
See also:
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- Sale to company in return for shares in company (query whether shares worth less)
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- Minority interest in company owning listed shares is worth less than outright ownership of the equivalent number of shares (Battle).
- Even sale in return for 98% was thought to carry a 2.5% discount (Battle at 93).
Legislation:
Cases: Battle v. IRC [1980] STC 86;
HMRC manuals:
Commentary:
See also:
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Effectiveness of gift
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- Intention to make gift + delivery
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- See Scott v. HMRC [2015] UKFTT 266 (TC) - gift of paintings by removing from wall, handing over and then putting back on wall.
Legislation:
Cases:
HMRC manuals:
Commentary: McCutcheon 7-49;
See also:
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Identity of donor
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- Consenting to transfer of subscriber share to wife was a gift by husband
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- See Garnett at §28.
Legislation:
Cases: Garnett v. Jones [2007] UKHL 35;
HMRC manuals:
Commentary:
See also:
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