At the time of the transfer, Mrs Staveley was in the late stages of a terminal illness, from which she died six
weeks later. The First-tier Tribunal found that her sole motive in making the transfer was to sever all ties with the company.
The revenue argued that, whilst what someone intended was a question of fact, the treatment of that factual intention for the purposes of section 10 was a question of law. And on a legal analysis of the transaction new rights had been substituted which conferred a benefit on the sons within the statutory words.
However, any assertion that the relevant intention was merely an intention on the part of the disponor to engage in a transaction which, as a matter of legal analysis, created new rights which conferred a benefit on a person could not be correct.
It was the disponor’s actual intention in making the disposition that was in point. The search was for what the disponor intended, and in particular for whether the disponor intended to confer any gratuitous benefit on any person.
The finding of the Fist-tier Tribunal was that Mrs Staveley had not intended to improve the sons’ position by transferring the funds. It followed that section 10 applied and so the transfer of the funds on its own was not a transfer of value.
A second question then arose (Transfer Issue 2). Even if the transfer into the personal pension plan, viewed alone, would escape inheritance tax, it had to be looked at in a wider context.
The revenue argued that the transfer had to be taken together with Mrs Staveley’s omission to take lifetime benefits under the personal pension plan. The omission was intended to benefit the sons so, on the revenue’s argument, when the two were viewed together the transfer was also clothed with an intent to confer gratuitous benefit.
They pointed to the definition of “transaction” in section 10(3) as including “a series of transactions and any associated operations”, arguing that the transfer and the omission amounted to “associated operations”, linked by common intent.
On that argument, the intention to confer benefit on the sons by not taking lifetime benefits coloured the “transaction”, so that it was not possible to bring the disposition within section 10(1).
