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HMRC internal manual

Inheritance Tax Manual

Grants on credit: is a penalty appropriate?

It is not uncommon for the existence of an asset to come to light or for a valuation to be amended just as the account (IHTM10011) is about to be delivered. If this happens there is a temptation for the Personal Representative (PR) to proceed with the original application to avoid delay and the need to renegotiate finance. But, to avoid a penalty after they have delivered the account the PR must tell us about the additional asset or correction in a valuation at the time they make the application. In these circumstances we should consider sympathetically any request to postpone payment of the additional tax until after the grant is issued.

We should not normally refuse this type of application unless:

  • the Exchequer is at risk of losing tax or
  • there is likely to be a problem paying the additional tax within a very short time frame after the grant is issued.

If you are concerned about the possible imposition of a penalty after the grant in this or any other circumstance you should ask for advice from the Penalty Portfolio Holder.

In particular, you should liaise with the Penalty Portfolio Holder where the PRs wish to obtain an urgent grant, perhaps to deal with the sale of the deceased’s house, without making full and proper enquiries into the estate (IHTM05125).