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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Has an election been made?: late elections

The line that we take about admitting late elections accords with the general policy of the department. They are only admitted in exceptional circumstances. It is therefore very important where the taxpayers have delivered a variation without an election, or where you are aware that a variation is anticipated, that you give the taxpayers as much warning as possible about the need for a timely election.

In the event that you receive a late election, you should explain the statutory position and say that if the taxpayers consider that exceptional circumstances apply, they should provide full details. If the position accords with the approach below, you must consult with your manager before agreeing that a late election may be allowed. All other cases should be referred to TG.

If a detailed explanation of the Board’s position is needed, the following form of words describes the practice as considered and approved by the Chairman

“The Board of HMRC take the view that, as Parliament fixed a time limit of six months in IHTA84 s142(2) for giving notice of an election under the section, that time limit should apply generally. They have therefore decided that the discretion to allow late elections should be exercised only in exceptional circumstances. In the Board’s view, simple oversight or mistake, whether innocent or otherwise and whether on the part of the taxpayer or his or her agent, does not satisfy the test of exceptional circumstances.

“A typical situation in which a late election may be allowed is where there is an intention to elect but the election cannot be submitted in time because one of the main parties concerned was physically unable to complete the necessary documentation. Thus, we would generally admit an election which was made as soon as possible if the only reason for its delay beyond the six months was, for example, that one or more of the participants could not sign it because they were seriously ill or on a lengthy absence abroad. And we would be prepared to consider favourably cases where the only professional adviser who could act in the matter was similarly prevented from acting timeously.

“I am therefore unable to agree that the time limit imposed by IHTA84 s142(2) should be extended in this case.”