Death and Personal Representatives: Valuation of assets at date of death and associated liaison with Specialist PT-IHT: Ascertained values: Valuation of assets: ascertained values: sales shortly after death
If quoted shares are sold within 12 months of the date of death or land within four years of the date of death the person liable to pay the IHT can make a claim to reduce the value of the asset for IHT purposes to the sale value. Detailed guidance is at IHTM33000+ (Land) and IHTM34000+ (Shares). The relief can also be claimed on the disposal of assets that have been valued in accordance with the related property rules. Detailed guidance is at IHTM09731+. All of these reliefs have to be claimed by the person liable to pay the IHT. Often this will be the personal representatives. Relief is not due if personal representatives sell as bare trustees for the legatees unless the legatees are liable for and pay the IHT.
The main purpose of the reliefs is to cover situations where there had been a fall in the value of the asset since the date of death. If so, provided the basic principles for the application of S274 are present, the base cost for Capital Gains Tax is the sale price. The sale is a disposal for Capital Gains Tax purposes and should show a small loss equal to any incidental costs of disposal. CG32260+ require you to check with Specialist PT - Trusts and Estates IHT if the taxpayer claims that a value of any asset other than quoted shares has been ascertained for IHT purposes. The value reported by Specialist PT - Trusts and Estates IHT will reflect any relief claimed. Specialist PT - Trusts and Estates IHT will also advise if they receive a claim after you have made your report.
There is no requirement to check the value of quoted shares. In these cases you should consider asking Specialist PT - Trusts and Estates IHT if relief has been claimed if the shares are sold at a loss within 12 months of the death. The relief may not have been claimed if other shares are sold at a gain. The IHT rule requires all quoted shares sold within 12 months to be adjusted to the sale price including those that have gone up in value. Specialist PT - Trusts and Estates IHT will advise all the share values that have been adjusted.
In the case of land the IHT legislation does not require that the land is sold at a lower value if the sale is within three years of death. A taxpayer may make a claim to substitute a higher sale price if IHT reliefs mean that no additional IHT is payable. The advantage they want is an acquisition cost for Capital Gains Tax purposes that is the same as the disposal proceeds eliminating the gain on the sale. In Stonor v CIR Spc288 the Special Commissioners held that a claim cannot be made if there is no IHT liability on the asset. See IHTM33026. In these cases TCGA92/S274 does not apply and the acquisition cost is the market value at death.