Sale of House and Reservation of Benefit

[Rows Mum]

A sells her house to B, a longstanding family friend, at market value. After the sale, B allows A to continue living in the house for a very nominal rent. Any reservation of benefit issues here? Sale hasn't yet gone ahead. Intention is to get 2 separate valuations or ask 2 valuers to negotiate sale price. Should this make the arrangements robust for IHT? Any POAT issues?

Thanks in advance

[LozaACCS]

The first issue is whether the disposal is to a connected person and if so is it made at market value.
S270 IHTA 1984 adopts the definition of connected persons from S 286 TCGA 1992, on that basis you are not connected, even if you were the disposal is at market value.

The second issue is whether a GWR takes place.
A GWR arises where a disposal is by way of gift and the donor retains a benefit, there is no gift so no GWR. (S102 FA 1986)

The third issue is a potential liability to POAT, The disposal condition would be the relevant charging provision.
A transaction made at arms length is an excluded transaction (FA 2004 Sch 15(10))

So no you have nothing to worry about

[Rows Mum]

Thanks, Loza. That's what I thought, and good to have it confirmed.