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Where Taxpayers and Advisers Meet

IHT 35

Incredulum
Posts:2795
Joined:Thu Dec 03, 2009 5:35 pm
IHT 35

Postby Incredulum » Sun Mar 29, 2020 5:02 pm

Another question, please, if you would be so kind.

An estate has IHT payable. IHT35 claim for relief on loss on sale of shares brings the IHT down to nil (the last month has been somewhat 'helpful'). Do the executors have to pay the tax in order to reclaim it?

This seems perverse, but on the front of IHT 35 it has a "helpful" statement at NOTE 1 "If no tax has been paid
there can be no appropriate person to make a claim." A claim has to be made, so it needs an appropriate person, and there is the reference to tax being paid - not payable. I can't really believe this, as presumably a payment of £1 would satisfy the requirement...

The full note is as follows:

"Only make a claim for relief if you are the ‘appropriate
person(s)’. The ‘appropriate person(s)’ are those liable for
the Inheritance Tax (IHT) on the value of the shares or
securities. For example, the executors, the administrators,
trustee(s) or donee(s). If more than one group of people
is liable for the tax, the ‘appropriate persons’ are those
who are actually paying it. Tell us the capacity in which
you are signing the form. All appropriate person(s) must
sign this form.
We cannot accept a claim signed by agents.
You cannot claim relief if no Inheritance Tax is due on
the delivery of the IHT account. If no tax has been paid
there can be no appropriate person to make a claim."

Thank you.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: IHT 35

Postby maths » Mon Mar 30, 2020 6:34 pm

No, in theory IHT does not need to be paid first. If a reclaim can be lodged before any IHT on the estate is due this can be done.

IHT is payable with 6 months of the end of the month of death (ignoring instalment basis).

However, where there are sales of qualifying investments, profits and losses arising over the 12 months post death need to be aggregated to ascertain if a net loss arises in which case it may not be practicable to lodge a claim before the due date for any IHT to be paid unless no sales are anticipated post the six month period. In addition, purchases may reduce any relief.

The legislation provides that any sale must be made by an appropriate person liable for IHT (typically the PRs). However, where no IHT is due on the deceased's estate there cannot by definition be an appropriate person who is able to lodge a claim ie no claim can be made.


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