(1) Property is sold for more than the value declared on the IHT Return within 12 months of the date of death
(2) The estate was not initially subject to IHT
(3) The increase in the value of the property does not lift the estate value above the combined IHT allowances, meaning the estate is still not subject to IHT
Can the executors work on the basis that the sale value has been substituted for the declared value on the IHT Return, meaning the estate would not be subject to either IHT or CGT, where they have responded ‘yes’ in column F of box 11 of the IHT405 to the question “Do you want to use the sale price as the value at the date of death?” Do they still need to report the gain to HMRC, or are there no further reporting requirements given that the change does not affect the tax position of the estate?
If there is no IHT payable, HMRC do not consider that the date of death value has been ascertained. It is up to the executors to decide whether to report the original value as the base cost and pay CGT on the difference or treat the sale price as the true date of death value. If there is a gain and CGT is due it is reportable within 60 days of completion. If there is no CGT to pay, it will be reported either as a complex estate on an SA900 or informally at the end of the administration period. An explanation of the base cost should be provided and HMRC can then decide whether to refer it to the Valuation Office Agency.
You need to bear in mind that if the date of death value has not been agreed/ascertained for IHT purposes [ normally where IHT is payable ] then it has not been established for CGT purposes - s274 TCGA 1992 and the value you put forward for CGT is effectively an estimate.