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HMRC internal manual

Inheritance Tax Manual

Loss on sale of land: procedures: issuing form IHT38

The relief should normally be claimed on form IHT38 to ensure that all necessary information is provided. In most cases you will find out about a claim for loss on sale of land relief when you receive the form IHT38 from the taxpayers. You will need to follow the instructions at IHTM33031 onwards for handling a claim for relief.

You should send the taxpayers a form IHT38 to complete if:

  • they tell you that they wish to claim the relief
  • the taxpayers tell us about a lower value than originally returned or agreed even if the relief is not specifically claimed (unless the value is still being considered by the VOA (IHTM23002).
  • the VOA tells you about a possible claim.

Where unrepresented personal applicants (IHTM02161) are dealing with the case and you become aware that an interest in land (IHTM33061) is being sold for less than the date of death value, you should:

  • bring the relief to their attention
  • send them a copy of form IHT38.
  • warn them about the risks of making a claim that may not be in their favour (IHTM33013), if this might apply.

You should not ask the taxpayer to complete a form IHT38 in the following circumstances

  • where the difference between the sale price (IHTM33072) and the value on death (IHTM33100) is small and no relief would be available (IHTM33083)
  • the date of death value is still being considered by the VOA, when you should first report the sale price to the VOA (IHTM33035)
  • where there is a claim for relief on a sale of a joint interest in land (IHTM33181) unless you are satisfied that the claim will not be disadvantageous (IHTM33182) to the taxpayer
  • where the taxpayers claim to substitute a higher sale value (IHTM33026) and no tax is due on the sold land.
  • where you are aware, or believe, that more than one interest in land is being sold, unless you are satisfied that the claim will not be disadvantageous (IHTM33013) to the taxpayer.