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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Loss on sale of land: appropriate person: definition

The ‘appropriate person’ is defined

  • as the person liable for the Inheritance Tax attributable to the value of interest in land under consideration, or
  • where there is more than one such person, as the person liable - the one who is in fact paying the tax, IHTA84/S190 (1).

The reference in IHTA84/S190 (1) to the ‘person liable for inheritance tax attributable‘ to the land means the person who either paid the tax or has an obligation to pay it. If there is no tax payable on the interest, there is no person liable to pay the tax and any claim should be denied.. This point was determined in the case of Stonor v IRC [2001] SPC 288.

In most cases the appropriate person will be the personal representative (IHTM05012) of the deceased or the trustees (IHTM16050) of a settlement. For the purposes of this relief both should be treated as a single and continuing body of persons distinct from the persons who may from time to time act in such capacity, IHTA84/S190 (3). An example of an appropriate person who is not a personal representative or a trustee is a specific legatee who is bearing the tax.

In practice it may be possible to regard a sale as made by the appropriate person if it is made on their behalf. However, no relief can be given if, for example, a personal representative or trustee accounts for tax and then transfers the land to a beneficiary who sells at a loss. The beneficiary cannot claim because they are not the ‘appropriate person’, and the personal representative or trustee cannot claim because they have not sold the land.

Example

Xanthe and Yolanda are the personal representatives of land specifically devised to Zak, who pays the tax, and sells the property to Ameer. This might be regarded as a sale by Zak.

You should refer any case where the taxpayer or agent claims that land is sold on behalf of the appropriate person to Technical.