We share clear, practical examples to help UK families deal with common pitfalls in taxes and estate planning. Our aim is simple: show where real disputes and everyday admin create the biggest tax exposure, and what to do next.
We support trustees and executors by phone and email across the UK and overseas. Fees start from £295 + VAT per hour and are agreed up front. Our team uses real scenarios — from mixed ownership property to nil rate band arrangements — to explain risk and action.
Expect practical guidance for homeowners and families, not abstract theory. We explain how value, control and benefit can affect inheritance tax and iht exposure. Small daily actions often trigger large liabilities: who paid bills, who lived where, who used the bank account.
For a detailed worked example, see our practical guide here: IHT case study and guide. Read on for planning lessons on record-keeping, reporting and making sure behaviour matches legal form.
Key Takeaways
- Real-life examples show how routine actions can create inheritance tax risk.
- Focus on value, control and who benefits when assessing exposure.
- Keep clear records and make sure behaviour matches the legal structure.
- Mixed ownership of property often causes the biggest disputes.
- We offer practical support for clients, with transparent fees agreed up front.
Why HMRC scrutiny matters for trusts and estates in the UK
A few missed forms or unclear records can turn an ordinary estate into a tax problem. Small reporting slips often trigger questions about value, who controlled assets and whether gifts were genuine.
We see common failings that trip up trustees and an executor.
- Missing paperwork or late returns that leave gaps in the timeline.
- Unclear beneficial ownership or informal use of funds.
- Relying on a deed alone rather than matching behaviour to the stated purposes.
The rules look at facts. Inspectors review what happened in real life, who used the assets, and whether value was effectively transferred. They can look back several years before death to judge behaviour.
Practical help from an accountant or adviser usually means checking filings, reconstructing records and correcting returns early. That reduces the chance of a long dispute.
When planning becomes a dispute
Planning crosses into challenge when benefits are enjoyed informally or actions drift from the declared purposes. That is when IHT exposure rises and questions follow.
Quick risk checklist
- Can you find contracts, bank records and dated correspondence?
- Who paid the bills and who lived in the property?
- Are beneficiary rights clearly recorded and acted on?
- Has an adviser or accountant reviewed the position recently?
If you spot gaps, seek early advice. For a practical note on structuring and debt planning, see our guide on inheritance tax structuring and debt planning.
hmrc trust and estates case studies: lessons from real clients and real disputes
Our format turns complex family events into four clear steps: facts, risks, outcome and the practical fix.
How to read each example
We start with the facts. Then we list the risk points plainly. Next we show what happened in the tax outcome. Finally, we give a short, practical fix you can apply straight away.
What to look for in every case
Separate emotion from analysis. Families have stories. Our job is to see how behaviour and paperwork line up with the declared purposes.
- Property used by the wrong person often creates the biggest exposure.
- Documents that do not match reality invite challenge.
- Gaps between intention and action are a recurring theme.
Timing, purpose and the examiner’s view
Time matters. Activity in the years before death can pull earlier transfers back into a tax charge.
Purpose is not decorative. Trustees must act for the stated aims and keep records to prove it. That simple discipline reduces the chance of a lengthy dispute.
Case study: An estate and a trust holding the same property across the years
A property held partly in personal name and partly in a separate arrangement creates practical and fiscal uncertainty. This was Graham’s situation after his mother died. Her will left the home partly outright and partly within a continuing arrangement. Over time each part was treated differently in practice.
Why this becomes a problem. Mixed ownership often surfaces when families refinance, rent or agree a sale. Lenders, buyers and officials ask for clear title, historic valuations and proof of who benefitted when.
Key risks
- Getting the value right at relevant dates.
- Identifying lawful beneficiaries and who received income.
- Proving what trustees actually did versus what documents say.
- Timing: missing records turn the whole matter into a dispute.
Practical steps for families
Rebuild a timeline. Gather title deeds, trustee minutes, bank statements and receipts. Record who paid bills and who lived in the house.
| Risk | Evidence to gather | Immediate action |
|---|---|---|
| Value at key dates | Valuations, sale offers, mortgage statements | Get a retrospective valuation |
| Beneficial clarity | Wills, beneficiary statements, income records | Agree and document beneficial shares |
| Trustee duties | Minutes, correspondence, payments made | Record trustee decisions and align actions with purposes |
Tribunal case study: Afsha Chugtai v HMRC and gifts with reservation of benefit rules
We summarise a clear example so families can see how behaviour matters. Mohammed Chugtai set up two arrangements in Feb 2000: one over funds in an Abbey National account (later at Santander) and one over property at Henley Road, Caversham. He was excluded as a beneficiary; his children were named instead. He died in Feb 2017.
Background facts
HMRC issued a notice in Aug 2022 valuing the total chargeable estate at £843,950. That included £380,000 for Henley Road and £62,239 for the Santander account. In total, £442,239 of the arrangement value was pulled back into the estate.
Tribunal focus and decision
The First-tier Tribunal found Mohammed kept using the Santander account for personal bills, rent receipts and property outgoings. The court applied the seven-year test and held the assets were not enjoyed to his exclusion in the years before death. The appeal was dismissed.
Practical tests for trustees and beneficiaries
- Control: who paid bills from the account?
- Benefit: who lived in the property and who received income?
- Evidence: bank statements, receipts and decisions recorded by trustees.
| Risk | What shows continuing benefit | How to prevent it |
|---|---|---|
| Using trust funds | Personal payments from the account | Separate personal and trust accounts; record trustee payments |
| Occupying property | No market rent charged; household costs paid by trust | Charge market rent; document tenancy terms |
| Lack of records | No trustee minutes or receipts | Keep dated minutes, valuations and correspondence |
Expert takeaway: the deed alone did not stop the tax result. Behaviour decided the outcome. To see practical guidance on structuring and records, visit our guide to secure your family’s future.
Tribunal case study: HMRC wins against the home-loan double-trust IHT planning scheme
The Pride decision is a clear example of what goes wrong when liability mechanics try to erase a home’s value from an estate.
Planning aimed to remove property value while allowing the occupant to remain rent-free. The basic idea: sell the house into an IIP arrangement, move value into a children’s arrangement and create a large loan note to offset the estate at death.
What happened in Pride
- An IIP arrangement from 2002 left Mrs Pride entitled to live in the home.
- The house was sold to trustees for £800,000; trustees owed that amount back.
- A flat was bought for £535,000 for her use and a loan note with a long redemption value was issued to the children’s trustees.
- On death (Oct 2016) the property fund was worth £3,013,942 and the executor sought to deduct the loan note.
The tribunal held the deduction failed. Anti-avoidance rules stop deducting liabilities created by the deceased to defeat IHT. In plain terms, you cannot manufacture a debt in life that wipes out estate tax at death.
What this means now
- Many legacy schemes remain in place; advisers must review them with care.
- We advise taking specialist advice before any sale, appointment or reporting event tied to a death.
Trust and probate support case studies: discretionary trusts, executors, and the IHT400
After a death, a nil rate band directed into a discretionary vehicle often adds busy paperwork at the worst possible time. This usually feels like extra admin for the executor and the family.
What follows matters: decisions about inheritance tax must be made quickly. Executors need to confirm which assets sit inside the estate and which sit in the discretionary arrangement. Trustees must record why they act and how they value assets.
Trust and probate advice after death
When James left most to his wife and placed the nil rate band into a discretionary trust, practical questions arose. Who signs elections? Which values apply? What paperwork proves trustee choices?
Help with probate process
The IHT400 is the anchor. Executors often collate asset lists and start the form, but gaps are common. Missing income streams, mixed-up estate and trust amounts, or half-filled valuation boxes invite queries.
Managing income and capital
Good records stop most problems. Trustees should keep dated minutes, bank statements, broker valuations and letters of wishes. These show who received income, what capital was moved and why.
| Typical issue | Evidence to gather | Immediate action |
|---|---|---|
| Confusing estate and trust amounts | Will extract, bank statements, transfer receipts | List assets separately on IHT400 and trustee schedules |
| Missing income sources | Rental agreements, dividend slips, pension payslips | Match income entries to bank credit entries |
| No record of capital appointments | Trustee minutes, payment vouchers, beneficiary receipts | Record retrospective minutes and attach receipts |
| Valuation gaps | Estate agent reports, broker valuations, recent sale prices | Get retrospective valuations and note valuation dates |
How we help: a solicitor and a specialist tax team can work with the executor to verify figures and speed the probate timetable. We prepare clear audit trails so trustees and executors can show the amount, value and purpose of each movement.
- Checklist to reduce queries: separate ledgers for estate and discretionary funds.
- Keep minutes for every trustee decision about income or capital.
- Attach valuations and receipts to the IHT400 and trustee files.
- Get specialist help early to avoid delays in probate.
Working with a specialist tax team on trust and estate matters
Our team acts as a steady hand when tax questions become urgent for families and advisers. We work with trustees, executors, accountants, solicitors, financial advisers and private clients. We explain who does what and why that matters.
Typical hand‑off points
Common moments when specialist input prevents problems:
- Before submitting IHT forms or values.
- When a trust owns property or receives income.
- If enquiries start or legacy schemes cause worry.
| Service | What we do | Outcome in one hour |
|---|---|---|
| Phone/email review | Clarify risk and next steps | Clear action list and evidence needed |
| Document check | Assess valuations, minutes, accounts | Notes trustees can rely on |
| Legacy review | Look at older planning and campaigns | Practical corrective plan |
We work remotely across the UK from Dudley. Fees start at £295 + VAT per hour, agreed up front. Clients often leave a first call with clear tasks to protect value.
Get help: call 01902 585 311 or email stephanie.churchill@churchilltaxation.co.uk or nicole.andrews@churchilltaxation.co.uk. For agent guidance see registering a trust as an agent.
Conclusion
Every example shows one simple truth: behaviour matters as much as paperwork.
Practical risks repeat across each case. Continued benefit, blurred ownership, poor records and assumptions about planning increase tax and inheritance exposure.
Get the value right, separate assets clearly, and record trustee decisions that show the declared purposes were followed.
Remember, trusts are not set‑and‑forget. Over time a property arrangement can slip from its aim if day‑to‑day actions change who benefits.
If a similar property plan, legacy scheme or trust estate still allows someone to use funds, review it before the next reporting date or life event. For practical steps, see how trust funds can help.
With timely evidence and clear advice most families can resolve uncertainty, protect inheritance outcomes and reduce stress.