The Compendium

Further, if a person gives away their home to their children (including adopted, foster or stepchildren) or grandchildren the ‘tax free threshold’ increases to £500,000.

The standard Inheritance Tax rate is 40%. It’s only charged on the part of an estate that is above the above-mentioned thresholds.

(See ‘HMRC’.]

Insolvency

There is a formal or ‘technical’ definition of insolvency contained in section 123 Insolvency Act 1986.

It states that a company is ‘insolvent’ if it is ‘unable to pay its debts’. This occurs when:

1. a creditor to whom the company is indebted in a sum exceeding £750 has served on it a written demand (in the prescribed form) requiring the company to pay the sum. The company must pay that sum within three weeks of the declaration; if not this will be a (technical) ‘insolvency’; or
2. in England and Wales, execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or
3. in Scotland, the induciae of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made; or
4. in Northern Ireland, a certificate of unenforceability has been granted in respect of a judgment against the company, or
5. it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.

When statutory wording, such as sections 239-240 Insolvency Act 1986 state that in order to take an action for a preference, an officeholder must show that the company was ‘insolvent’ at the time of the transaction, or rendered insolvent due to it, it is to this definition of insolvency that an Insolvency Practitioner will turn.