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HMRC internal manual

Capital Gains Manual

Death and Personal Representatives: Period of administration and ascertainment of residue: Personal representatives: extended period of administration

There are some exceptional cases where all the figures are apparently available to enable residue to be ascertained but it has to be accepted that the period of administration is continuing.

One example is where distributing shares in accordance with legatees’ fractional entitlements to residue would result in one legatee receiving a majority shareholding whilst the other legatees would only receive minority holdings. Because of the disparity in values between majority and minority holdings it may be necessary for the personal representatives to apply the rule from Lloyd’s Bank Plc v Duker and others [1987] 3 All ER Ch D 193. This would require them to sell these shares rather than distributing them in specie.

The period of administration would continue in such a case until the shares were sold and the Capital Gains Tax liability arising to the personal representatives was quantified.

The rule referred to above is of fairly limited application. The fact that a majority shareholding would be broken into minority holdings on distribution should not be accepted as preventing distribution of shares and thus the ending of the period of administration. Nor should minor valuation differences between minority shareholdings passing to the legatees be accepted as covered by the rule in the Duker case.

The period of administration may also be extended where the distribution of the estate is being challenged. The personal representatives may be unable to distribute the estate pending the outcome of litigation.