The transfer of funds from one pension policy to another and a deceased individual’s omission to take lifetime pension benefits were held to be treated as transfers of value for inheritance tax purposes.

The deceased (RFS) was diagnosed with cancer, and in October 2006 was advised that her prognosis was terminal. On 3 November 2006, RFS applied for the funds from one pension scheme (‘section 32 policy’) to be transferred into another (‘AXA PPP’). She completed an expression of wishes requesting that the death benefits be paid equally to her two sons. The AXA PPP commenced on 9 November 2006. Although the terms of the policy entitled RFS to access lifetime benefits, she did not do so. RFS died on 18 December 2006.

HM Revenue and Customs (HMRC) issued inheritance tax determinations in respect of two alleged lifetime transfers of value by RFS, arising firstly out of the transfer by RFS of funds out of the section 32 policy into the