Legislation had since been enacted to exclude omissions to take pension benefits from the scope of inheritance tax in circumstances such as the present case: see section 12(2ZA) of the Inheritance Tax Act 1984, as inserted by paragraph 47(2) of Schedule 16 to the Finance Act 2011.
Lady Black, with whom Lord Reed and Lord Kitchin agreed, said that shortly before her death in 2006, Mrs Staveley had transferred funds from her existing “section 32 buyout policy” pension scheme (to which section 32 of the Finance Act 1981 applied) into a personal pension plan. She did not take any pension benefits at all during her life and, in those circumstances, a death benefit was payable under the personal pension plan.
Mrs Staveley had nominated her two sons as beneficiaries of the death benefit, subject to the discretion of the pension scheme administrator and, after her death, the death benefit was paid to them.
The revenue determined that inheritance tax was due, on the basis that both the transfer of funds into the personal pension plan, and Mrs Staveley’s omission to draw any benefits from the plan before her death, were lifetime transfers of value within section 3(1) of the Inheritance Tax Act 1984.
Section 3(3) extended the reach of section 3(1) to include an “omission to exercise a right” in certain circumstances. Section 10(1), however, provided that a disposition was not a transfer of value if it “was not intended, and was not made in a transaction intended, to confer any gratuitous benefit on any person”.
The first question (Transfer Issue 1) was whether the transfer, as a disposition viewed on its own, amounted to a transfer of value or whether section 10(1) applied.
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