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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Grants on credit: protecting the charge to tax: undertakings

In return for HMRC agreeing to a grant on credit and certifying the IHT421 or C1 (probate summary), the Personal Representatives (PRs), or in some cases the agents, will need to give a written undertaking which will be a legally binding promise to take the necessary steps that will lead to the prompt payment of the outstanding tax and interest.

In straightforward cases where the assets can be realised fairly soon after the grant the PRs, in consideration of HMRC agreeing to issue form IHT421 or C1 without requiring full payment of the IHT due on delivery of the account, should undertake to:

  • submit the application for a grant as soon as they have received the stamped form IHT421 and to notify HMRC as soon as the Grant/Letters of Administration have been issued
  • immediately following receipt of the grant of representation to take all the steps necessary to promptly realise sufficient assets in the estate to pay the IHT and any accrued interest
  • pay the outstanding tax and interest from the proceeds of sale or the realisation of the assets as soon as soon as they are received.

Where the assets are easily realised, for example, listed stocks and shares or insurance policies, we would expect the PRs to undertake to pay the tax within 4 weeks of the completion of the sale.

Funding the tax due and obtaining a receipted IHT421 or C1 are usually the final steps to be taken before a grant can be issued so we expect the IHT421 to be submitted quickly. However, the PR may still have other steps to take such as an interview at the probate registry. We should always ask the PRs:

  • what needs to be done
  • when it will happen

The undertaking should be amended accordingly.

If the PRs are relying on a third party to take some action you can accept that they will use their ‘best endeavours’ to obtain probate without delay.

We want the outstanding tax to be paid as soon as the assets are realised. Generally the PRs should not hold on to any funds received whilst they are waiting for other assets to be realised - but where several assets are likely to be realised in quick succession you can accept that the money will be paid within 5 working days so some or all of the payments can be aggregated.

If the assets are more difficult to sell or are situated abroad then a longer period may be allowed. For undertakings involving land see IHTM05132 and IHTM05133 and for assets abroad see IHTM05134.

We will not accept undertakings from PRs that are not resident in the UK. These PRs should appoint a professional UK resident attorney (IHTM05125) who can give the necessary undertaking.