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HMRC internal manual

Inheritance Tax Manual

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HM Revenue & Customs
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Pre-owned assets: election into Inheritance Tax: when a late election may be accepted

Events beyond the chargeable person’s control

In general, you may accept a late election if the chargeable person can show that an event beyond their control prevented them from sending us the election by the relevant filing date. If the chargeable person was able to manage the rest of their private or business affairs during the period in question, we are unlikely to accept that they were genuinely prevented from delivering the election on time.

Examples of situations that you may accept as an event beyond the chargeable person’s control include those where

  • an election was posted in good time but an unforeseen event disrupted the normal postal service and led to the loss or delay of the election,
  • the chargeable person’s financial records or other relevant papers were lost through fire, flood or theft and the information necessary for the completion of the election could not be replaced in time for it to be completed by the relevant filing date,
  • the chargeable person was so seriously ill that they were prevented from dealing with the election before the relevant filing date and from that date to the time the completed election is sent in.

If an illness involves a lengthy stay in hospital or convalescence the chargeable person is expected to have made arrangements for completing and sending in the election on time. But there may be circumstances where this is not possible and you may accept these as a valid reason.

You may accept the serious illness of a close relative or partner as a valid reason for a delay in electing only if

  • the situation took up a great deal of the chargeable person’s time and attention during the period from the relevant filing date to the date the completed election was sent in, and
  • steps had already been taken to have the election ready on time.

You may accept the death of a close relative or partner shortly before the relevant filing date as a valid reason for delay where the necessary steps had already been taken to have the election ready on time.

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Other circumstances

There may be cases where, given the overall circumstances, you may accept a late election even where the chargeable person cannot show that the reasons for the late election were beyond their control. Essentially, this will be where the chargeable person can show that they were unaware - and could not reasonably have been aware - that they were liable to the POA charge and elected within a reasonable time of becoming so aware.

It is likely that such cases will involve a number of relevant features. You should ask the chargeable person or their agent to send with their late election a full explanation of the factors that they wish to be taken into account, which may cover (but need not be limited to)

  • the nature of the transaction that led to an income tax charge arising,
  • when the transaction was put in place,
  • the advice the chargeable person received at the time the transactions were put in place and, if later, when the POA charge came into force,
  • the circumstances in which they became aware of their liability to the POA charge,
  • any other relevant information.

You may only accept a late election where the chargeable person can show that their failure to elect by the relevant filing date is not a result of

  • their taking active steps to avoid both a POA charge and an Inheritance Tax charge under the GWR provisions,
  • the wish to avoid committing to either a POA charge or an election before the 31 January deadline in order to have longer to see which will be the most beneficial course of action.

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Changes to HMRC guidance

Where HMRC makes changes to its guidance - for example, because we consider that a POA charge arises from particular transactions that we did not previously regard as giving rise to a charge - you may accept a late election where the taxpayer can show that they elected as soon as practicable after becoming aware of our revised view.

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Changes to the law

Where a change in the law results in a charge arising from particular transactions that did not previously give rise to a charge, you may accept a late election where the taxpayer can show that they elected as soon as practicable after becoming aware of the change.

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Liaison with other parts of HMRC

When you receive a late election, you should consider whether you have been given enough information to explain why the chargeable person did not elect on time. If not, you should write to the chargeable person or their agent for more details.

In all cases, you should also contact the chargeable person’s income tax office and let them know we have received a late election. Whether you may then be able to make a decision on the election may depend on whether they have opened an enquiry into the chargeable person’s SA affairs, or whether they intend to do so as a result of the late election (or a combination of the election and other factors).

If there is an ongoing enquiry, or we intend to open one, you may want to delay your decision on the late election until the enquiry is concluded, in case information comes to light during the enquiry that is material to that decision. But, if you are satisfied that no further information will affect your decision, there is no need to wait until the enquiry is finished before deciding whether or not to accept the late election.