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HMRC internal manual

Inheritance Tax Manual

Liabilities: investigating liabilities: general principles

Your main concern when investigating liabilities is to make sure that substantial amounts of tax are not lost to the Exchequer as a result of taxpayers claiming deductions to which they are not entitled.

But the existence of a liability may also alert you to possible omissions in the estate or even undeclared gifts. This means that when you consider liabilities you need to look at them in the context of the estate as a whole. You should ask yourself if the deduction is consistent with the assets that are known to be in the estate. For example, if there is a deduction for garage repair bills, has a car been included as an asset of the estate? Or, where there are substantial credit card bills or a loan, what has the money been spent on?

If you have genuine concerns about whether the liability is deductible or evidence to suggest possible omissions and worthwhile amounts of tax are at stake you should raise suitable enquiries with the taxpayers.

Funeral expenses (IHTM10371) are considered in section 10 of the manual.