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HMRC internal manual

Inheritance Tax Manual

Foreign property: blocked assets

Sometimes a foreign state may ‘block’ the transfer of capital from its banks and other financial institutions for an unspecified period. Usually this is for economic reasons. For a taxpayer with chargeable assets in such a country there may be problems in paying the tax due on the assets.

Extra statutory concession F6 (ESCF6) allows a taxpayer to defer the payment of the tax due on the blocked foreign assets until:

  • the restrictions are lifted, or
  • the assets are moved outside the foreign state, or
  • the assets are used and enjoyed by the persons entitled to them. 

The taxpayer is expected to discharge the debt as soon as any money is remitted to the UK. The concession does not apply to lifetime transfers.

Shares and Assets Valuation are responsible for agreeing the date of death value of any blocked assets that may qualify for a significant discount. They are also required to satisfy themselves that the concession applies.

To obtain the concession the taxpayer must provide a written undertaking. The undertaking must confirm that they intend to use their best endeavours to have the value of the blocked assets remitted to the UK.

While the enquiry remains open the caseworker is responsible for making sure the undertaking has been submitted and is still valid.

If the enquiry is settled but the debt is still unpaid the case must be sent to Debt Management & Banking with a suitable memo attached. Debt Management & Banking will then monitor the taxpayer’s compliance with their undertaking to pay all tax due.