Dealing with a claim: action in Risk: first death before 9 October 2007
When you receive a claim for transferable nil rate band (TNRB), you should make sure that the appropriate documents listed at IHTM43006 have been provided and, if not, contact the taxpayer to obtain them. You should review the claim and correct any obvious errors, including collecting any additional tax due as a result, before releasing form IHT421/C1.
But, where the death was many years ago, you should bear in mind that supporting evidence may not always be available. Provided the documents show the claim is valid and any tax due has been paid, you can release form IHT421/C1. You should then consider the risk to tax in deciding whether or not to accept the claim as offered. Where records don’t exist, personal representatives are entitled to complete their claim to the best of their ability and based on the information available. Provided there is no evidence that any other assets were chargeable, you can accept the claim.
Where the claim can be accepted at the outset, you should do so before referring the case to Service or Compliance (IHTM43014). Where it is not possible to establish with certainty how much of the nil rate band was unused, perhaps because of the terms of the Will, or the availability of relief and the tax at stake is worthwhile, you should refer the case to Compliance to take the matter up with the taxpayer.
The personal representatives of Arthur are unable to trace any documents from the death of his wife Betty, other than her death certificate. A request to the Court Service confirms that there is no trace of a grant of representation. Arthur’s assets are all in his sole name. The personal representatives make a claim to transfer the full nil rate band on the grounds that it is likely that Arthur and Betty owned their assets jointly and everything passed to Arthur by survivorship.
This is a reasonable conclusion presented with these facts. There is still the question of possible gifts and other aggregable property, but Arthur’s estate suggests that the family may have been making gifts or using trusts, you may accept the claim.
The personal representatives of Clare have been able to obtain copy documents for her late husband David from public sources. These indicate that the nil rate band can be transferred in full. David died in England on 1 January 2002 and his estate qualified as an excepted estate. The net value on the grant was declared as not exceeding £100,000. However, the family recall that an Instrument of Variation (IoV) was executed and the estate was left equally between Clare and their son, but neither the IoV nor any records that confirm the actual net value of the estate can be traced.
In these circumstances, all you can go on is the information available. If the death was before 22 March 2002, £100,000 is likely to represent the upper limit of the probate fee band for estates in England & Wales valued between £100,000 and £70,000. So, the true net value of the estate was somewhere in between the upper and lower figures. (Where the death was on or after 22 March 2002, the net value on the grant is rounded up to the nearest £1,000.)
Again, unless there is any suggestion in Clare’s estate that the family may have been making gifts or using trusts, it would be reasonable to treat the value of David’s estate as the mid-point between the two (£85,000). As half of this was left to the son, £42,500 would have been chargeable. As the nil rate band at David’s death was £242,000, 82.4380% was unused and is available to transfer.
The bands for Probate fees in England Wales before 22 March 2002 were
£5,000 to £10,000
£10,000 to £25,000
£25,000 to £40,000
£40,000 to £70,000
£70,000 to £100,000
£100,000 to £200,000