IHTM19010 - Capital debts due to the estate: introduction
The Law says that if the deceased had any debts owing to them at the date of death it must be assumed that the debt (and any interest repayable on it) will be repaid in full. On this basis the full value of any capital debt outstanding, together with any interest due at the date of the deceased’s death, must be included in the Inheritance Tax account (IHTM10021), as an asset of the estate (IHTM04029).
But, if it is impossible or not reasonably possible for the money to have been repaid, a reduced figure may be included in the account. If a reduced figure is included in the account, the taxpayer or agent must also explain why a reduced figure has been shown and how it has been calculated. They must provide any evidence they have to support the reduced amount.