Loss on sale on Land and Property by estate

The deceased’s estate includes a commercial property and all the shares in a limited company. The entire residue of the estate is left on discretionary trusts.
The Executors propose to sell the the commercial property to the company and then claim loss relief on the fall in value. We are aware of the SDLT issues and acceleration for the payment of IHT on the commercial property.
I was initially concerned that section 191(3) might cause a problem but HMRC’s manual IHTM33081 and commentary in Simon’s at I4.312 appears to indicate that this will not be a problem, despite the ‘connection’. Do other’s agree, or take an alternate view?
Kurt Lee
Lester Aldridge LLP

I know I am “vox in Rama clamans”, even to some sceptical Luminaries of this Forum. Falstaff said “Wisdom cries out in the street and no man regards it”.

HMRC Manuals are dangerous. You should ask yourself; would you buy a used car from this organisation?

In Sippchoice [2020] UKUT 149 Crown Counsel argued at [41] on behalf of his client HMRC that:" HMRC’s manuals do not have legal force and the passage [sc. PTM 042100] was wrong". He was just doing his job as an advocate; it is his hypocritical hubristic instructions I object to.

I set out in full for convenience two key paragraphs and suggest that advice to taxpayers might be that Manuals are critically essential sources but the work of the Devil.

"43. However, we do not consider that the passage from PTM042100 can be read in the way
suggested by Mr Bradley [for HMRC]. We accept, as Ms Murray [for the taxpayer] submitted, that the statements in the
pension tax manual are consistent with Sippchoice’s case. The natural reading is that HMRC
did not see any objection to a promise to make a monetary contribution to a pension scheme
being satisfied by a transfer of an asset or assets where the member and scheme administrator
both agreed to it. This is even more clearly stated in relation to employer’s contributions in
HMRC’s pensions tax manual at PTM043310:
“… it may be possible to structure a transaction so that a monetary
contribution is achieved without the need for cash to pass between the
employer and the pension scheme.”

  1. Nonetheless, the fact that HMRC’s pensions tax manual contains passages that support
    Sippchoice’s case carries little weight in this case. Sippchoice has not sought to make any
    argument that it relied on the passages or had a legitimate expectation that HMRC would not
    resile from them. Statements in HMRC’s manuals are merely HMRC’s interpretation of the
    law in their internal guidance and they do not have the force of law. We must interpret the
    legislation in accordance with the principles of construction described above and if we
    conclude, as we have, that the legislation bears a different meaning to that found in the HMRC
    manual, the legislation must be preferred".

The Manual was advertising a Used Car, as it turns out. Caveat Emptor.

The obiter hint at judicial review is bittersweet. Where a taxpayer does rely on a Manual, organising a JR action with a 3 month time limit in parallel with a substantive long-winded appellate process that must be exhausted first is something out of Kafka.

Jack Harper

1 Like

A sale to a company, even if owned by any persons mentioned in s191(3), does not seem to prevent relief being obtained.

Malcolm Finney