HM Revenue and Customs (HMRC) offer useful guidance on the mechanics of the transfer of the unused IHT ‘nil rate band’ between spouses or civil partners and gives several examples of this complex relief.
One important point for executors is that a claim to transfer the unused IHT nil rate band must be made by personal representatives within the permitted period. That period is 24 months after the end of the month in which the second deceased died or, if it is later, the end of the period of 3 months beginning with the date on which the personal representatives first acted as such. HMRC do have the ability to extend the period for a claim, but it should never be relied upon that they will use their discretion to benefit a taxpayer. HMRC will accept a late claim ‘if the claimant can show that an event beyond their control prevented them from making their claim within the permitted period’, but warn that ‘if the claimant 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 making the claim on time’.
Examples of situations HMRC may consider as events beyond the claimant’s control include those where:
HMRC accept that there may be other circumstances where it is not possible to meet the time limit and may accept the following as a valid reason for a delayed claim to transfer the unused IHT nil rate band: