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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Sales: Special treatment of shares in Northern Rock & Bradford & Bingley

The failure of a publicly owned bank or building society will usually mean that shares in the bank or building society will lose value. Where is it considered appropriate, the shares may be treated as cancelled,. This will allow the executors to make a claim for relief against the loss.

Northern Rock (NR)

On 17 February 2008, the Government announced proposals to take NR into a period of temporary public ownership. On 18 February 2008, the Stock Exchange listing of shares in NR was suspended. On 22 February 2008, following the enactment of the Banking (Special Provisions) Act 2008, all shares in NR were transferred to HM Treasury. On 9 July 2008, the Government announced that, as an administrative measure, NR shares transferred to HM Treasury on 22 February 2008 are to be treated as having been cancelled on that date, solely for the purposes of the relief for loss on sale of shares.

If you receive a claim for loss on sale of shares relief that includes shares in NR that had NOT been sold before 18 February 2008, you should deal with the NR aspect as follows.

Deceased died before 18 February 2007

As the 12-month period ran out before 18 February 2007, you should apply the normal rules for loss on sale of shares relief.

Deceased died on 18 - 21 February 2007

As the NR shares were suspended on the anniversary of the death, relief is available under IHTA84/S86B (IHTM34156). You should refer the IHT 35 to SAV Information Support and ask whether the sale value offered for the shares can be accepted. The date of sale is to be taken as first anniversary of the date of death. If this date is not shown on the IHT 35, please include it in your covering memo to SAV.

Deceased died on or after 22 February 2007 and on or before 21 February 2008

Purely for the purposes of the loss on sale of shares relief, NR shares are to be treated as cancelled when they were transferred to HM Treasury on 22 February 2008. Relief is available under IHTA84/S186A. The guidance at IHTM34157 is relevant and you should adopt a sale value of £1 for the NR shareholding.

Deceased died on or after 22 February 2008

The asset in the deceased’s estate will be a right to compensation (IHTM10073) for the transfer of NR shares to HM Treasury, rather than NR shares. So no question of loss on sale relief will arise.

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Bradford & Bingley

On 29 September 2008 the Government announced the immediate transfer of all shares in B&B to HM Treasury. On 2 April 2009 the Government announced that, as an administrative measure, B&B shares transferred to HM Treasury on 29 September 2008 are to be treated as having been cancelled on that date, solely for the purposes of the IHT relief for loss on sale of shares.

If you receive a claim for loss on sale of shares relief that includes shares in B&B that had NOT been sold before 29 September 2008, you should deal with the B&B aspect as follows.

Deceased died before 29 September 2007

As the 12-month period ran out before 29 September 2008, you should apply the normal rules for loss on sale of shares relief.

Deceased died on or after 29 September 2007 and on or before 28 September 2008

Purely for the purposes of the loss on sale of shares relief, B&B shares are to be treated as cancelled when they were transferred to HM Treasury on 29 September 2008. Relief will be available under IHTA1984/S186A. The guidance at IHTM34157 is relevant and you should adopt a sale value of £1 for the B&B shareholding.

Deceased died on or after 29 September 2008

In relation to B&B, the asset in the deceased’s estate will be a right to compensation (IHTM10073) for the transfer of B&B shares to HM Treasury, rather than B&B shares. So no question of loss on sale relief will arise.