In the case of Mrs Staveley deceased, Mrs Staveley owned a “section 32” pension plan which she transferred into a personal pension plan with AXA.
At the time the transfer occurred Mrs Staveley already knew she was in serious ill health and following her death shortly afterwards, HMRC claimed inheritance tax (IHT) arguing that there had been a transfer of value under section 3(1) IHT Act 1984, which reduced her taxable estate.
Under her Will the beneficiaries were her two sons. They were also the nominated beneficiaries under the AXA pension plan. Her main motive in transferring the plan was to ensure that her ex-husband did not benefit from the plan, not to avoid inheritance tax per se. HMRC lost its appeal to the Upper Tax Tribunal.
Autonomy Wealth view: HMRC have for some time contested pension transfers made by people in seriously ill health. It might now seem that, irrespective of state of health, if it can be shown that the reason for the transfer was not connected to IHT planning, that no lifetime transfer of value should arise. These reasons might include a transfer to achieve lower charges on a SIPP or to access a more flexible type of pension better suited to the new rules introduced in 2015. We should expect further guidance from HMRC as a reaction to this case and indeed we do not yet know if they intend to appeal.