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:

• the claim was posted in good time but an unforeseen event disrupted the normal postal service and led to the loss or delay of the claim;
• the records necessary to make the claim were lost through fire, flood or theft and the records required to make the claim could not be replaced in time for it to be made within the permitted period; or
• the claimant was so seriously ill that they were prevented from dealing with the claim within the permitted period and from that date until the claim was made. If an illness involves a lengthy stay in hospital or convalescence, the claimant is expected to have made arrangements for completing and making the claim on time.

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:

• the serious illness of a close relative or partner, but only if the situation took up a great deal of the claimant’s time and attention during the period from the end of the permitted period to the date the claim was made and steps had already been taken to have the claim made on time; or
• the death of a close relative or partner before the end of the permitted period where the necessary steps had already been taken to make the claim on time.