Reservation of benefit/inheritance tax

[Janine Moore]

My clients were invited to move into her mother's property when father died in 1973. A "granny flat" was then built on the back of the property in which the mother lives. The "granny flat" has a separate postal address and council tax although some utilities are piped in from the main house. Mother has not lived in the main house since 1973 when the extension was completed.

In 1986 Mother gifted the property to daughter and son-in-law jointly but remained living in the "granny flat".

The property (main house and granny flat under one title) has recently been valued at £400,000.
Mother is now very elderly and in poor health. I do not think that the IR will claim reservation of benefit in respect of the whole of the value of the house but I can find nothing within the manuals.

Any takers?

[Instinctive]

My opinion (not researched) would be that GROB would apply only to the granny flat and not to the whole house in view of the separate council tax bills etc.

I had a similar situation with one title deed for a house at front and workshop at the rear, both separately self-contained. The Revenue insisted on not treating the house as part of the business premises.

Ramnik
ramnikrp@hotmail.com