I have a couple of qualifying life interest trusts where the life tenant has died recently and it’s the first time using the new style IHT100 forms. In both cases I am not dealing with the life tenant’s estate or probate application.
In one case, the executors of the life tenant’s estate and the trustees of the trust are the same people so it seems clear that IHT418 can be used.
In the other, the trustees are not the same as the life tenant’s executors. Reading the IHT418 form it appears that the trustees could complete this, but reading the IHT100b (death) form, it appears that this is the correct form to use. HMRC’s guidance that I have been able to find seems to contradict itself.
If trustees who are not the LT executors can use form 418, in what circumstances is the IHT100b(death) used?
Personally I think that both should be completed and submitted as they will be dealt with by different teams at HMRC, particularly if the lifetime IHT team has been (previously) or will be (going forward) involved in the trust with entry charges, exit charges and 10 year anniversary charges; they will expect an IHT 100b. Perhaps, if this IIP trust was never previously relevant property and ends with the death of the life tenant then an IHT100b would not be required and opening this all up would be overkill.
The PRs should obviously complete the IHT 418 and the death IHT team may cross check this with the lifetime IHT team, or alternatively issue an enquiry notice.
IHT418 is for the executors, including where they are the trustees. IHT100b (death) is for trustees who are not also the executors. There are 2 forms 100b and the 418 refers to 100b, where the IIP holder is still alive. and not to 100b (death). So the executors fill in 418 for one trust and the non-executor trustees fill in a 100b (death) for the other. There is now no form IHT100 to be filled in as that designation now attaches to the guidance setting out the various forms. This numbering apparently makes sense to HMRC but at least now only one form by each set of trustees is required and IHT100 does make this clearhttps://www.gov.uk/guidance/tell-hmrc-that-inheritance-tax-is-due-on-a-gift-or-trust-iht100
"The end of a qualifying interest in possession
Fill in form IHT100b to tell us when a beneficiary’s interest in possession in a trust has ended in their lifetime.
Do not us this form to tell us if the ending of the interest in possession is due to the person’s death. These events need to be reported by the trustees of the trust on form IHT418 instead.
The end of a qualifying interest in possession because someone has died
Fill in form IHT100b (death) to tell us that a qualifying interest in possession has ended because someone has died.
Do not use this form if:
you’re an executor and completing form IHT100b — fill in form IHT418 instead
Jack - there may only be one form required for each event now, but rather than the previous 8 pages plus a 1 or 2 page event form, most of these “one-off” IHT100 forms are around 18-20 pages to cover every eventuality - tax simplification obviously!
I wonder how much time and energy was expended by the pointyheads on this form revamp. I would need persuading that the interests of the taxpayer and advisers registered at all alongside those of the Department.
The forms still require only basic information and “don’t send us any nasty old documents”. The ensuing procedure is then like something Noah might have recognised or at least those filing income tax returns before SA.
For example, I know of individuals who filed reports of chargeable CLTs of shares in an unlisted company in April 2023 each at a value of just under £325k. No response to date from HMRC. A tax return for 2023 would have prevented a discovery assessment after 31 January 2025. For IHT there is a 4 year period of uncertainty unless they self-select themselves for an in-depth investigation by seeking a certificate of discharge.
In Medieval times you could expect an estimated protective income tax assessment just before the 6 year period expired. How many notices of determination go out with a month of the 4 years still to run?
HMRC recently told us that, if the executors of an estate are different people to the trustees of a linked life interest trust, they would expect the executors to complete form IHT418 and the trustees should complete form IHT100b (death). Both forms should be sent in at the same time.
Section C1 of the new form IHT418 also allows trustees (who are not executors) to complete the form, but it looks as if HMRC either have not realised that themselves yet or still prefer trustees to submit form IHT100b (death). Both forms ask for the same details…