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syndicate lottery win.

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cedelel | 12:13 Wed 18th Apr 2007 | Business & Finance
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My friend buys lottery tickets on behalf of a syndicate of 3 work mates. If they ever won a major prize how will my friend give the winnings away to the rest of the syndicate without risking a potential inheritance tax bill if he were to die within 7 years. (assuming the rest of his assets take up his nil rate band) Who would be liable to pay the tax, his estate or the recipients ie the others in the syndicate?
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Have they signed a syndicate agreement?

If there is no [written] agreement and the winner of a prize transfers part of it to others, these gifts may attract Inheritance Tax. If the members of the group can prove that the distribution of the prize was made in accordance with a group agreement entered into before the win, no liability to Inheritance Tax will arise [effectively this means you need a written agreement].
If you go to the National Lottery website, there is info on syndicates and also a syndicate form that you can download and fill in.

http://www.national-lottery.co.uk/player/infor mation.do?info=syndicatefaqs
You need to draw up a syndicate agreement which each of you signs. All of you sign and keep a copy and the signatures are witnessed. Just like making a will really. The same principles apply. You must show that each individual is contributing equally i.e. �1 per week and that if they miss their contribution that week that they do not get a share ( try paying for 4 weeks in advance ) and that the payout should be equal. If there are 4 of you and you win �4 Million then you will receive �1 Million each. If only one person pays and collects they alone will be liable for IHTax. They could also keep all the money! This has already happened and been challenged in court and the others lost. If you win my name and address can be supplied : )
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Thank You very much all of you . Very helpful.

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