We will not automatically be aware of a non-HMRC creditor
instituting bankruptcy proceedings against a liable person on an
IHT file. Similarly, the creditor may not be aware of any IHT debt.
The bankruptcy, either actual or impending, may be disclosed by the debtor or, as is more often the case, will come to light as a result of an enquiry by EIS.
If you become aware that the taxpayer has, or is about to, become bankrupt and there is a quantifiable IHT debt you should advise EIS immediately of the amount due so that it can join and be incorporated in proceedings.
Details of the IHT arrear need to be submitted to EIS in a File 29 via the Debt Management & Banking B2.
If there are no working papers in EIS, the File 29 should be prominently noted in red - "NEW BANKRUPTCY ARREAR FOR REGISTRATION".
You should send a covering memo with the File 29 containing all relevant information along the lines set out above for initial submissions to EIS where no arrears are held. In addition, the memo should refer to the date of any Bankruptcy Order and the Bankruptcy Court reference.
If the EIS reference is known, the cover should be noted in red - "NEW BANKRUPTCY ARREAR FOR REGISTRATION - EIS ARREARS HELD AT (EIS File reference)".
If there are doubts about the IHT claim, EIS should be advised of the aspects that need to be resolved and the tax consequences. You should then try to settle the doubts and establish the claim for the purposes of lodging a final proof in the bankruptcy as soon as possible.