Finance Act, 1940

Amendment of section 7 of the Finance Act, 1894.

25.—(1) In this section—

the word “disposition” includes any trust, covenant, agreement, or arrangement;

the expression “subject matter” includes any annual or periodical payment made or payable under or by virtue of the disposition in relation to which the said expression is used;

the expression “property derived from the deceased” means any property which—

(a) was the subject matter of a disposition made by the deceased, either by himself alone or in concert or by arrangement with any other person, otherwise than for full consideration in money or money's worth paid to him for his own use or benefit, or

(b) represented any of the subject matter of such a disposition, whether directly or indirectly and whether by virtue of one or more intermediate dispositions, and whether any such intermediate disposition was or was not for full or partial consideration.

(2) Any allowance which, but for this sub-section, would be made under sub-section (1) of section 7 of the Finance Act, 1894 , for a debt incurred by the deceased as mentioned in paragraph (a) of the said sub-section (1) or for an incumbrance created by a disposition made by the deceased as therein mentioned shall be subject to abatement to an extent proportionate to the value of any of the consideration given therefor which consisted of—

(a) property derived from the deceased, or

(b) consideration (not being property derived from the deceased) given by any person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived from the deceased.

(3) In the application of sub-section (2) of this section to a case in which the whole or a part of the consideration given consisted of such consideration as is mentioned in paragraph (b) of the said sub-section (2) and as to which it is proved to the satisfaction of the Revenue Commissioners that the value of the consideration given or the said part thereof (as the case may be) exceeded that which could have been rendered available by application of all the property derived from the deceased (other than such, if any, of that property as is included in the consideration given or as to which it is proved to the satisfaction of the Revenue Commissioners that the disposition of which it, or the property which it represented, was the subject matter was not made with reference to, or with a view to enabling or facilitating, the provision of the consideration or the recoupment in any manner of the cost thereof), no abatement shall be made in respect of the excess.

(4) The following property, that is to say—money or money's worth which is paid or applied by the deceased less than three years before the death either—

(a) in or towards satisfaction or discharge of a debt or incumbrance in respect of which sub-section (2) of this section would have had effect on the death if the debt or incumbrance had not been satisfied or discharged, or

(b) in reduction of a debt or incumbrance in respect of which the said sub-section (2) has effect on the death, shall be treated as property deemed to be included in the property passing on the death by virtue of paragraph (c) of sub-section (1) of section 2 of the Finance Act, 1894 , and estate duty shall, notwithstanding anything contained in section 3 of that Act, be payable in respect thereof accordingly.

(5) The provisions contained in this section shall have effect in respect of every case in which the death of the deceased occurred on or after the 8th day of May, 1940.