Planning arrangements involving a loan guarantee executed before her death by the settlor to a discretionary trust were ineffective in reducing the deceased’s estate for IHT purposes, but the appellants’ appeals were allowed as HMRC erroneously issued a clearance certificate in respect of the deceased’s estate.  

Summary 

Planning arrangements involving a loan guarantee executed before her death by the settlor to a discretionary trust were ineffective in reducing the deceased’s estate for inheritance tax (IHT) purposes, but the appellants’ appeals were allowed as HM Revenue and Customs (HMRC) erroneously issued a clearance certificate in respect of the deceased’s estate. 

Background 

In May 2011, under arrangements offered by tax advisers, the deceased (JEF) settled a trust (JFT) with initial capital of £20,000. The JFT trustee was a