IHTM30043 - Liability on potentially exempt transfers (PETs): recourse to transferor's personal representatives

The personal representatives ( IHTM05012) of the transferor are liable under IHTA84/S199 (2), but in view of IHTA84/S204 (8) they are liable only to the extent that either

• because of IHTA84/S204 (2), (3) and (5) no person is liable for the tax (or part of it) under IHTA84S199 (1)(b), (c) and (d)

or

• the tax remains unpaid twelve months after the end of the month in which the death occurs.

IHTA84/S204 (2), (3) and (5) are limitations of liability provisions. The liability of the personal representatives is subject to the standard IHTA84/S204 (1) limitation ( IHTM30032).

The circumstances in which recourse to the transferor's personal representatives is likely are

• where the tax on the value transferred exceeds the value of the asset received by the transferee ( IHTM30051) (e.g. the transferee receives a small minority holding of unquoted shares ( IHTM18131), but the value transferred on the loss to the estate ( IHTM04054) basis is considerably greater)
• where recovery cannot be obtained from the transferee.

There are more detailed instructions ( IHTM30044) on the secondary liability of the transferor’s personal representatives. You must also bear in mind the instructions on applications for clearance certificates ( IHTM40102) in respect of the free estate where tax on a chargeable PET ( IHTM04057) remains unpaid.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)