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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Limited grants: protective action

Before confirming that HMRC has no objection to the application for a limited grant proceeding you should consider whether any steps are needed to protect the charge to tax.

All cases need to be considered on their merits. You should consider:

  • whether the tax due should be protected with a land charge
  • obtaining an undertaking
  • asking the taxpayer or agent to provide a copy of the order

It is unlikely that a land charge or an undertaking will be necessary in applications for Administration Ad Colligenda Bona (IHTM05141) regarding the sale of the deceased’s house or other property. The property is about to be sold and the administrator will hold the proceeds of sale. The proceeds will be paid over when a full grant has been obtained. If there is other property in the estate which is not about to be sold you should consider placing a land charge on the other property.

On the other hand, where the administrator will have full powers to collect in and distribute the estate but an account has not yet been delivered or tax paid, we should have a clear agreement about when the account will be delivered and tax paid. This should be recorded in an undertaking. You should consider placing a land charge on the other property.

Where a limited grant has been applied for you should consider why the limited grant is needed. We will need to take protective action to ensure that the interests of the Exchequer are not put at risk by any disputes that arise in the administration. For example, an application for Letters of Administration pendente lite could result in costly litigation that might significantly reduce the assets of the estate before a full grant is obtained and tax paid. Even behind a simple application for Administration Ad Colligenda Bona there could be a dispute. A caveat may have been entered preventing the executors applying for a full grant. In cases where there is any suggestion of costly litigation we will need to ensure that all taxes are paid or secured before the assets in the estate are used up by legal costs.

You should ask the taxpayer or agent to undertake to send you a copy of the order obtained so you can check the extent of the powers or restrictions that apply to the administrator - they are not always the same as those requested in the affidavit.