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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Grants on credit: introduction

The law requires Personal Representatives (PRs) (IHTM05012) to pay all or part of the Inheritance Tax (IHT) due on the deceased’s estate before they can obtain a grant. The guidance at IHTM05001 and IHTM30172 explains how much needs to be paid. If the PR:

  • finds it impossible to raise all the funds needed to pay the tax due and
  • can demonstrate that they have made every practical effort to raise the money

We may allow them to postpone payment of all or part of the tax due. We refer to this as a grant on credit. We will only allow a grant on credit in the most exceptional circumstances.

Most cases where a grant on credit is requested are received by the Pre-Grant team who send a letter to the PRs explaining when we will consider a Grant on Credit. Any subsequent correspondence should be referred by hand to Service Technical Support (STS).

STS will refer the following cases to Risk (IHTM01030):

  • Difficult and complex cases where it appears that the grant on credit application is only one of a number risks in the case
  • Cases where the account is submitted more than 12 months after the date of death
  • Any case where 8 weeks have passed since the account and application for a grant on credit were received but where the grant on credit application has not been resolved

Risk will assess the cases and decide which of them should be more thoroughly investigated by Compliance. The Risk caseworker will highlight that there is a grant on credit under consideration before referring the case to Compliance. Compliance will take responsibility for all aspects of the case including the grant on credit. STS will provide support and advice in cases of difficulty.

In all other cases Risk will complete the routing forms, if appropriate, but return the cases to STS to deal with the grant on credit application. STS will consider the appropriate time at which to send the case to Service. This will depend on the stage at which consideration of the grant on credit has reached but the underlying aim should be to release the file as soon as possible. If the file is to be returned to STS the routing slip should be amended accordingly.

Except for the cases dealt with by Compliance, STS will make sure that any necessary steps (such as land charges) are taken to protect HMRC’s claim. They will ask for written undertakings to pay the tax within a specified period, before allowing the grant. When the form IHT421 (or C1) is issued, STS will mark the file cover to show that a grant on credit has been obtained. The file will be processed in the normal way, but STS will keep details of the case in a separate sub-file. They will monitor the case and make sure that the undertakings are met within the specified period. When the tax that was due on delivery of the account has been paid they will make sure that any land charges are removed. The STS sub-file will then be closed and sent to the main death file to be stored inside it.

Applications for limited grants of administration (IHTM05150) are also the responsibility of STS.