Loss relief - to revalue upwards

Dear All,

I am dealing with an estate where the property was valued at dod in May 2019 at £600k. RICS valuation. We submitted a IHT400 and claimed RNB, RNRB, TNRB and TRNRB and no IHT was payable as a result.

It has now sold for £700k. This increase would, if accepted as the IHT value now result in a IHT liability. I am aware this would usually be treated as a gain for CGT, but the IHT liability (due the application of unused nil rate band etc.) would be less than the CGT.

My question is around loss relief, which I understand from a strict interpretation of the legislation could be claimed on an increase in value. The argument against this is that where the increase results in no IHT (and essentially is an attempt to rebase for CGT) there is no appropriate person to make the claim. However, in this case where the increase would result in IHT is there an argument that we could claim the relief as there is now an appropriate person?

HMRC guidance suggests they will reject a claim for an increase because the spirit of the legislation is to act as a “relief” but would it be possible to challenge that as the legislation and case law does not support it?

Be grateful for any thoughts and experiences!


Sarah Mannooch
Solicitor and Director of Legal Services at Kreston Reeves Private Client LLP

No direct experience of seeking to claim where assets have increased in value post death.

However, I tend to agree with Sarah’s analysis given both an appropriate person and the fact IHT would be payable.

Malcolm Finney

S.190(1) defines the ‘sale value’ as a property’s sale price ‘increased or reduced under the following provisions of this Chapter’. Despite S.191 being headed ‘The relief’, it is clear that an ‘appropriate person’ may make a claim to substitute the sale value for the purposes of IHT if the sale price exceeds the probate value otherwise adopted (by the de minimis). The claimant must have tax payable, in order to fit the definition of ‘appropriate person’. But can he be an appropriate person if he has no IHT liability before the effect of the claim? This may be enough to deny a claim in Sarah’s case.

If there were already an IHT liability, I would object to the HMRC view that no claim is available, otherwise why would S.190(1) envisage an increase.

HMRC call in aid the decision in Stonor & Anor (executors of Dickinson dec’d) v IRC, and IHTM33011.is headed ‘Loss on sale of land - the relief’; but their manual isn’t the law. and I am not persuaded that was a reliable decision.

Ray Magill

Dear Malcolm

Thank you for your response. It is helpful that theoretically it seems viable!

I will have to put this as an option to my clients, but explain it is untested I think.

Sarah Mannooch
Solicitor and Director of Legal Services at Kreston Reeves Private Client LLP

On reflection, and having re-read Stonor and Ray Magill’s point I tend (sadly Sarah) to the view that IHT needs to be payable prior to lodgement of any s191 claim. If so, then I suspect Stonor wouldn’t apply.

I think that the quantum of IHT payable could be de-minimis.

The point may however still perhaps be arguable.

Malcolm Finney

With regard to Ray Magill’s query(?) on s.190(1) IHTA - HMRC has previously suggested that the reference to an “increase” is to enable the relief to be netted off where more than one property has been sold during the relevant period. If any sell at a gain, this will reduce the value of the loss on sale of the other(s) and, in some cases, could result in an overall increase in IHT if the claim were to be made/accepted.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

I tend to agree with Ray that there is no appropriate person to make the claim as there is no IHT due until after the claim has been made and accepted.

Nigel Scase
Greene & Greene