New hurdles to overcome

In the second part of her series on home loan schemes, Emma Chamberlain reviews the current arguments relating to the schemes, including the impact of the recent Shelford case

In my first article in the March issue of Tax Adviser, I considered how home loan arrangements were set up and HMRC’s historic attack on them. This article reviews current arguments and the recent Shelford case. 

This article continues to consider the example of Andrew, a 70 year old with a property worth £1.5 million, who set up a home loan scheme to give away the value of his home but continue living there without a reservation of benefit problem and without losing main residence relief. See the March issue for full details of Andrew’s situation.

Current HMRC arguments

HMRC now considers that in relation to a loan repayable on the donor’s death, any home loan scheme fails to mitigate inheritance tax for four reasons: