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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Liabilities: investigating liabilities: Inheritance Tax

You may allow a deduction for the deceased’s outstanding Inheritance Tax liabilities in respect of an earlier event. This will include any outstanding interest due up to the date of death. But the deduction is restricted to sums actually paid out of the estate and not paid by someone else.

Before allowing a deduction you should review our file for the earlier event to confirm what sums are outstanding. You should also consider whether any assets received by your deceased as a result of the earlier event are reflected in the estate at the date of death.

Any unpaid tax may be provisionally allowed as a deduction when the grant of representation is taken out. You will need to keep the file open and ask the personal representatives to confirm that the estate has met the liability at a later date. The deduction may need to be adjusted at that stage.

There is separate guidance on how to deal with claims for a deduction for a contingent liability to pay Inheritance Tax at IHTM28171.