Is your inheritance tax arrangement contrived or abnormal?

Contrived or abnormal? What does that mean? John Barnett of Burges Salmon noted at the recent STEP Tax Conference that these words were being used more often to describe tax affairs, primarily to identify schemes where unusual lengths have been gone to in order to avoid tax.

He highlighted the case of Sir Joseph Nickerson, a larger-than-life character whose will has gone down in estate practitioner folklore as an example of how complex a family’s affairs can be. In fact, Sir Joseph’s estate went to great lengths to structure the passing down of assets in such a way as to fall outside of inheritance tax catchments.
Some of the methods were unusual, and HMRC viewed them as ‘contrived and abnormal’ and took issue. But what do these terms mean? Barnett cited two meanings for each:

Contrived: Bring about a result OR do something devious.

Abnormal: Outside the norm OR Significantly outside the norm.

As these words are becoming more commonplace in HMRC’s view of tax practice it is important we understand. If arrangements designed to minimise the tax exposure of inheritances are to be judged in this manner, which has the potential to be subjective, it is important trust and estate practitioners are clear on what constitutes a contrived and abnormal wealth planning structure.