Re: Inheritance Tax



Hi John,

I am based in Lanzarote as an Estate Agent and this question arises a lot.
I know the company you are referring to and there are mixed opinions on whether what they are purporting to be able to do is best, or proper advice. Interesting to see that the two – very knowledgeable – lawyers, Drakan and Maria who regularly post superb advice on here are a little unsure themselves. So that gives you some idea of what a minefield it is.
In days gone by, it was usual for an individual to set himself up as an S.L. company (Mr Jones S.L.) so that they could get away from paying property transfer tax on the purchase of a property. This still goes on to a certain extent, but the tax man wants to see actual trading companies these days and if he calls round to Mr Jones after he has bought the house in the name of a company, and there isn’t one, then it would get mighty interesting.
The people you are referring to advise that they can place all your worldly assests in a basket and so on and so forth to limit any IHT liabilities there may be.
They use a lot of “scare tactics” in their advertising over here and always quote the worst case scenarios which, when you read them, are pretty terrifying!
Personally, I had a purchaser a couple of months ago who used the company in question in order to set up an S.L. and a tax shelter in order to buy a property and take care of the subsequent IHT questions. This added approximately 4 months to the buying process whilst everything went through the local Registry.
I did not recommend my purchaser to this company – nor did I tell them to steer clear. My knowledge does not extend to these areas. As in any major transaction, I think it is best advice to talk to a few people on the subject and then make your own mind up as no doubt there will be areas of conflicting advice.
However, the advice I always give my purchasers is to speak to the Gestor I use for both my personal and business dealings and to the lawyer I use in Lanzarote, again for both personal and business matters. Should they not be able to give definitive answers themselves, they move in circles where they will know where to direct you for even further specialist advice.
It seems to be the case on this forum where prospective purchasers – and post event purchasers – are told to stay away from Lawyers recommended to them by estate agents. However, if nobody gave or took recommendations, then the world of business would be an even shadier place than it is today, and I have no hesitation in recommending the people I use for both personal and business transactions and would ask you to have a word with them before you proceed on what is reportedly an expensive thing to do. My partner in the business was quoted over 5000 euros in order to set up his IHT basket.
Once again, the company you are referring to are well known over here and in fact I have drawn up my own will with them. However, on the subject of their IHT scemes, I am unsure and personally have not done anything along these lines.
There is definitely a split opinion in local circles with some people swearing by what is on offer…and others swearing off it.
If you want to PM me I will give you the contact details of the lawyer and Gestor.