Statement of Practice 6 (1987)
Published 8 April 1987
© Crown copyright 1987
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1. The Commissioners for HM Revenue and Customs (HMRC), with the agreement of the Secretary of State for Culture, Media and Sport (and, where appropriate, other ministers), accept heritage property in whole or part satisfaction of an Inheritance Tax, Capital Transfer Tax or estate duty debt and any interest payable on the tax.
2. No Capital Tax is payable on property that is accepted in lieu of tax. The amount of tax satisfied is determined by agreeing a special price. This price is found by establishing an agreed value for the item and deducting a proportion of the tax given up on the item itself, using an arrangement known as the ‘douceur’. The terms on which property is accepted are a matter for negotiation.
3. Finance Act 1987 section 60 and Finance (No 2) Act 1987 section 97 provide that, where the special price is based on the value of the item at a date earlier than the date on which it is accepted, interest on the tax which is being satisfied may cease to accrue from that earlier date.
4. The persons liable for the tax which is to be satisfied by an acceptance in lieu can choose between having the special price calculated from the value of the item when they offer it or when the Commissioners for HMRC accept it. Since most offers are made initially on the basis of the current value of the item, HMRC consider them on the basis of the value at the ‘offer date’, unless the offeror notifies them that he wishes to adopt the ‘acceptance date’ basis of valuation. The offeror’s option will normally remain open until the item is formally accepted. But this will be subject to review if more than 2 years elapse from the date of the offer without the terms being settled. The Commissioners for HMRC may then give 6 months notice that they will no longer be prepared to accept the item on the ‘offer date’ basis.
5. Where the ‘offer date’ option remains open and is chosen, interest on the tax to be satisfied by the item will cease to accrue from that date.
Note: this statement was amended by IR 131 (January 2000).