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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Legal rights (Scotland): valuing legal rights as a debt of the estate

This situation is most likely to arise on the death of a surviving spouse or civil partner (IHTM11032) and is best illustrated by an example.

Example

The husband died in 1991 and left his estate of moderate value entirely to his widow, by will, making no provision for the son. The widow took the entire estate and the son neither claims nor discharges (IHTM12229) his legal rights (IHTM12221). Although the son has done nothing at all about his legal rights, he has not forgotten about his entitlement. Having regard to the values involved, there may have been no occasion for us to draw his attention (IHTM12223) to the implications of a claim or discharge more than two years of his father’s death. And under the general law, (IHTM12226) he has 20 years from his father’s death to make up his mind.

His mother dies in 2001. The son then claims his legal rights in his father’s estate. As the father’s estate passed entirely to the mother, the claim is made against her estate. The claim appears in the IHT400 as a liability of the mother’s estate and includes 10 years interest. (IHTM10305)

The liability claim itself is sound. You should apply the normal valuation principles (IHTM10305) in checking that the basic amount claimed is correct and ensure that the interest claim is reasonable.

You should refer to Technical any case where you have difficulty agreeing the basic amount, or the interest element appears excessive.

You should also consider the consequences of the legal rights claim in the father’s estate. If an unqualified certificate has been issued, or the claim is made outside the six year period in IHTA84/S240 (2), you will be unable to collect any additional tax that may now be payable. Even where no certificate has been issued and the claim is made within the six year period, you should not seek to collect any additional tax without first asking Technical to confirm that you should pursue the tax.

Where a suitably qualified certificate (IHTM40120) has been issued, you may seek to collect the tax that arises following a delayed legal rights claim. Interest is due from the normal due date.