TNRB late claim

I am dealing with an estate where husband passed away in 2011 and wife passed away in 2014. The son (who is also the executor) failed to make a claim for the TNRB within two years, as the house in which he was a joint owner passed by survivorship to him and there were no other assets which required probate and no debts to pay off. He continued to live in the house and assumed there was nothing further to do (he did not even update the Land Registry title to remove his mother’s name). Fast forward to today and our client is discussing his own Will with us and the topic comes up and we have advised him that IHT is payable. The client has instructed us to submit the papers and pay the IHT and we make an out of time claim for the TNRB. This has been rejected by HMRC on the basis that the executor’s lack of awareness of the two year time limit and lack of action in seeking legal advice is not sufficient reason to allow an out of time claim.

I have read the guidance in the manual (IHTM43009 - Claims and time limits: late claims - HMRC internal manual - GOV.UK) which deals with IHTA98/S8B(3)(b) and speaks in general terms of the types of events beyond the control of the person, but also speaks of where the claimant was ‘unaware’ and ‘could not reasonably have been aware of’ the need to make the claim. My question is:

  1. Is anyone aware of any examples/case law when a similar claim has been allowed? Particularly, bearing in mind that the claimant has acted in good faith, submitting all papers and made a full disclosure on being alerted to the correct position; as well as the ability of the officer to utilise their discretion given the facts of the case.

  2. Could a claim be made under IHTA98/S8B(3)(a) which deals with when the executor ‘first acted as such’ and gives them three months from this date to make a claim if it is later? (I have noted IHTM43007 - Claims and time limits: time limits - HMRC internal manual - GOV.UK and this seems to give scope to allow the executor’s scenario on the basis that a claim was made as soon as the executor started acting which I would argue was when we became involved/submitted the IHT papers in the matter.)

Any assistance would be appreciated.

Rizwan Rashid
I Will Solicitors Ltd

I assume that the IHT liability arises on the property passing by survivorship. If so you may want to look at IHTM43008 which deals with claims by people other than exors.

This says:
Where the personal representatives do not make a claim to transfer unused nil rate band (IHTM43007), any other person liable for tax may make a claim within such later period as an officer of Revenue & Customs may allow, IHTA84/S8B(1)(b).

It them goes on to say

This means that the trustees of a trust that is liable to Inheritance Tax (IHT) following the death of the life tenant, or the donee of a gift that exceeds the single nil rate band, cannot make a claim until the two year period has passed. In practice, though, where there is no need to take out a grant in the UK, so that no personal representatives will be appointed, you may provisionally accept a claim by trustees (or other liable people) within the two year period and calculate the tax accordingly.

As son would be jointly liable as property vests in him on death could this be an avenue worth exploring with HMRC

Hi Nigel

Thank you for this. Yes, this seems like a possible additional route, although in IHTM43008, it seems to assume that the other liable person would be making the claim within the two years instead of the PRs?

Does anyone have experience of this route or the two I set out?