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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Succession: Scottish Prior and Legal rights: Legal rights: Inheritance Tax practice where legal rights are discharged

Legal rights (IHTM12221) are property (IHTM04030) within the definition in IHTA84/S272 (IHTM04030) so they form part of the estate (IHTM04029) of the person entitled to these rights. You should treat any discharge (IHTM12229) of legal rights as a transfer of value, unless the discharge qualifies as an instrument of variation (IHTM35012). You should treat any deliberate omission (IHTM04023) to assert legal rights as a transfer of value in view of IHTA84/S3(3).

Where the there is worthwhile tax at stake, you should point out the Inheritance Tax consequences of a

  • claim for legal rights, or
  • discharge of legal rights, or
  • deliberate omission to claim.

You should draw the taxpayer’s attention to the difference in treatment that will follow where the claim, discharge or omission takes place before of after the second anniversary of the deceased’s death. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

In our view, the executors have a legal obligation to deal properly with legal rights in their administration of any estate. So, they should tell the people concerned about their rights and should, before they wind up the estate, either satisfy these rights or obtain a discharge of them. Normally the executors, or their agents, will explain the legal rights entitlement to prospective claimants, and will advise them of their right to be separately represented and advised in the matter.

If no testamentary provision has been made in favour of either the surviving spouse or civil partner (IHTM11032) or surviving children (IHTM12252) and there is worthwhile tax at stake you should ask whether the surviving spouse/civil partner/children or other issue have asserted or discharged their legal rights. You should normally obtain copies of the Deeds of Renunciation.

Where for any reason the surviving spouse or civil partner or children do not either assert or discharge their legal rights within two years of the death and the re is worthwhile tax at stake, you should refer the case to Technical.