IHTM30185 - Payment methods: payment by transfer of land or chattels

IHTA84/S230 and IHTA84/S231 contain provisions under which the Board of HMRC may accept land and chattels in whole or part payment of tax and interest. These provisions do not apply for the payment of tax prior to the issue of the grant ( IHTM05011).

Any offer to transfer property under those provisions in satisfaction of tax, and any indication that an offer may be made, must be referred at once to Heritage (via the Compliance Group Specialist C-1 in IHT Edinburgh), as also should any correspondence or enquiries on this topic.

Where any land transferred under IHTA84/S230 and IHTA84/S231 includes any trees or underwood in respect of which a IHTA84/S125 election has been made, the transfer is a disposal of the timber for the purpose of IHTA84/S126. Accordingly the IHT on the trees and underwood is payable immediately unless there has been an intervening disposition or death ( IHTM04122). If this view is seriously challenged, you should refer the matter to Heritage as above.

Practice

When property (land and chattels) is accepted in satisfaction of tax:

• the money provided for its acquisition is transferred from the non-HMRC government department concerned and placed on deposit. You should then deal with it as if it were a payment by the persons liable
• if any of the tax has already been paid in cash, arrange for a repayment on completion of the transfer.

Bear in mind that there are special rules concerning the interest charge ( IHTM30373) in these circumstances.