Gift Letter

Parkhouse20

If a parent gave a large sum of money eg £100,000  to their child as a gift more than 7 years ago, can HMRC argue this is a loan as there was no formal gift letter made ? 

Keep_pedalling

It is highly unlikely they would do that. Loans normally come with documentation, gifts don’t unless it was for a house deposit, where you would need toto sign a document to confirm it was a gift with the mortgage provider.

TadleyBaggie

Why would HMRC be concerned? Have repayments been made that would make the arrangement look more like a loan?

There are no income tax implications giving money to someone else and since it is over 7 years, IHT is also out of the picture.

NorthYorkie

See my comments on your other post today

[Deleted User]

If it, somehow, was regarded as a loan would it not be a liability of the estate and have the same effect as a gift which is more than seven years old? 

Parkhouse20

NorthYorkie said:

See my comments on your other post today

Thanks for your reply. My questions in part do relate to how HMRC distinguish between a loan and a gift. Without my father having written a gift letter I was asking if HMRC could argue that the gift ( it was a gift made over 16 years ago with no repayments asked for or made ) was  instead a loan that was never repaid and count the amount gifted back into his estate for IHT calculations. The IHT400 form does ask about  gifts made since 1986 I think. Presumably this is to rule out gifts with reservation etc which would attract tax.   On the same reasoning for my other post I would expect HMRC to want to see paperwork relating to whether a transfer of money more recently was a true gift or a temporary loan , rather than speculating on the intentions of the giver .

NorthYorkie

As mentioned elsewhere, you need advice from a professionally qualified adviser.