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HMRC internal manual

Inheritance Tax Manual

Liabilities: investigating form IHT419: practical guidance on dealing with FA86/S103 debts

The notes on form IHT419 ask the taxpayers to provide us with information about loans that are caught by FA86/S103. The form is designed to draw out the essential information we need. In many cases there will be a clear link (IHTM28361) between the original gift and the consideration for the debt. But problems may arise when there is an intermediate disposition - there is an example of this at (IHTM28367).

In this case it is likely that the facts would only come to light when the debt was queried. You should look out for suspicious liabilities (IHTM28040) and give careful consideration to the replies received to your enquiries.

If there is any evidence of the donor’s intention from the time the gift was made this could be helpful. This is because of the onus that is placed on the taxpayer by FA86/S103 (2)(b) to show that the gift was not made to facilitate the loan (IHTM28369).