Spouse exemption - not claimed first death

Trusts Discussion
1

Clients prepared their own IHT400 and in the Simple IHT calculation claimed the full RNRB and the remaining chargeable estate of £260,000 as being reduced by the NRB so no IHT payable.

However, deceased (their mum) left a right to occupy to surviving spouse (step-dad) for a period of 12 months following death on which spouse exemption should have been claimed and then the chargeable estate would only be £50,000, leaving an unused NRB of £275,000 and an unused RNRB of £175,000 for use in step-dad’s estate.

Can step-dad’s estate claim these unused allowances given that spouse exemption wasn’t claimed when it should have been? As a C4 Corrective can only be sent when IHT has been paid and the figures now differ - would HMRC accept a letter signed by mum’s executors sent with the IHT400 being submitted by step-dad’s executors?

Thanks

2

Where s18 applies it is mandatory so a repayment claim can be made in mum ‘s estate subject to the 4 year limit in s.241 IHTA.

I have never come across the point but it seems arguable to me that the survivor is entitled to have the transferable NRBs revised even if a repayment is out of time. One taxpayer’s error should not bind another. Two wrongs should offend even the official conscience, though that is highly flawed. S.241 bans a repayment out of time but not an argument that the unused nil-rate band of the deceased in s8A should be calculated on the correct legal basis.

Jack Harper

3

Please accept my belated thank you and apologies for not sending this sooner - this was very useful.