Occasionally you may meet a claim to substitute a higher sale price for the date of death value. In circumstances where no tax is due on the sold land because
You should deny the claim.
The grounds for denying the claim are that as there is no tax
attributable to the value of the land, there is no person liable to
pay the tax in respect of that asset. If there is no liable person
then there is no ‘appropriate person’ (
IHTM33050) as defined by IHTA84/S190
(1). Only the appropriate person can claim the relief and if there
is no such person then there cannot be an effective claim under
IHTA84/S191. This view was upheld in the case of Stonor v IRC
[2001] STC (SCD) 199.
When denying the claim, you should tell the person making the
claim that this office has not considered the value of the relevant
interests in land at the date of death for inheritance tax
purposes. Accordingly the value has not been ascertained within the
meaning of TCGA92/S274 and they are free to negotiate the date of
death value for the purposes of capital gains tax with the relevant
Inspector of Taxes.
You should refer to TG any claim to substitute a higher sale
price where the estate is taxable and tax is due on the land sold
at a higher value
before issuing a calculation or otherwise
accepting the claim. This instruction is particularly important
where you know or have reason to think that other land that is
exempt or fully relievable has been or may be sold. If we accept
the claim for the substituted value for the non-relievable
property, we may thereby let in the other (and possibly much
larger) sale of the exempt or fully relievable property. While this
consequence might not affect the IHT position, it might well lead
to a loss of other tax, particularly Capital Gains Tax.
Sales made in the fourth year for more than the date of death
value are excluded (
IHTM33074) from the relief.
