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HMRC internal manual

Inheritance Tax Manual

Liabilities: investigating form IHT419: reimbursement of guarantee debt

If you have accepted that there was consideration you need to consider the possibility of the deceased being reimbursed. This is because IHTA84/S162 (1) provides that the liability is to be restricted to the extent that reimbursement cannot reasonably be expected.

If the tax at stake is worthwhile, you should look at the borrower’s financial position at the date of death. This may involve valuing the deceased’s assets such as unlisted shares or land. If the borrower was an unlisted company you should ask for advice from Shares and Assets Valuation (SAV).

If the deceased was not the only person to guarantee the debt you will need to take into account the combined resources of the debtor and other creditor to calculate the deceased’s liability on death. To do this you will need to consider the financial position of the other guarantor at the time of the deceased’s death, as well as that of the borrower. The deceased’s liability will be restricted to that part of the debt that cannot be met by the combined resources of the borrower and the other guarantor.

When the financial position of the other liable people is known you can calculate the allowable deduction (IHTM28355) in the deceased’s estate.