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Requirements under the current law: the timing of the claim

Agricultural, Business and Heritage Property Relief

Chris Erwood CTA, ATT, TEP
Bloomsbury Professional
Publication Date:
September 2023
Law Stated At:
September 2023

For chargeable transfers made on or after 17 March 1998, a claim to relief must be made no more than two years after the date of that transfer (IHTA 1984, s 30(3BA)). However, s 30(3BA) provides the possibility of an extension by stating ‘or (in either case) within such longer period as the Board may allow’. Such a late claim may be considered, but HMRC will exercise their discretion to admit the claim only in exceptional circumstances and importantly, there is no right of appeal against that decision.

When dealing with the administration of an estate, even though the ability to make a claim to relief is a more specialised area of law than the ability to vary estate dispositions within two years of death (s142), it should still be part of that professional overview repertoire to consider whether there might be any heritage property in respect of which a timely claim, albeit provisional, should be made. It is the author’s experience that this rarely happens in practice.

Reference to HMRC discretion to extend the two-year time limit is made in CTNH para 3.5. Specifically, the failure to make the claim within the timeframe is not in itself an acceptable reason nor the failure to claim some other relief such as agricultural property relief (APR) or business property relief (BPR) nor a delay caused by putting in place a post-death variation. However, HMRC do look favourably on a case where it is considered that not to extend the claim period to accommodate the inclusion of particular property would be seriously detrimental to the interests of the national heritage and UK public.

HMRC will discontinue negotiations and will seek to charge IHT instead, where:

  • more than six months have elapsed from receiving the claim and even the rudimentary access proposals have not been settled; or
  • more than six months have elapsed since agreement that the item was pre-eminent, yet detailed access had not been agreed.

There is the facility for making a protective claim where it may not be known within the two-year period whether or not APR or BPR may instead apply and this is discussed at 18.4. However, this should not encourage the making of a ‘frivolous’ claim, merely to delay payment of IHT. Such an action could and likely would attract penalties as could the making of a claim to APR or to BPR that cannot, in truth, be supported by the facts of the case.

Note: no claim to relief can be made at the time of making a potentially exempt transfer (PET) but if that PET should later fail, such a claim to relief can be made within two years of the transferor’s death (s 30(3B)).

Heritage property in relevant property trusts


IHTA 1984, s 79 sets out the procedure for a relevant property trust (any trust in which there is no qualifying interest in possession under s 49) where heritage property has been the subject of a claim to relief either on or before the occasion on which it becomes comprised in the trust. In such circumstance, the trust ten-year anniversary charge (periodic charge) that would otherwise be imposed on that heritage asset under s 64 will not apply to any such anniversary that falls before a recapture charge triggered by a later chargeable event – the nature of that recapture charge is described more fully in Chapter 20. The rule applies where:

  • the property is designated as heritage property;
  • the appropriate undertaking has been given by the ‘appropriate person’; and
  • the property is ‘relevant property’ as defined.

Prior to Finance (No. 2) Act 2015 (F (No. 2) A 2015), there was a twin requirement that the claim to conditional exemption should be made before the date of the ten-year charge and be so made sufficiently in advance to enable that claim to be processed with the result the heritage property could be so designated before the date on which the ten-year charge fell due. As part of the 2015 trust simplification process, this time constricted rule was amended by F (No 2) A 2015 and carried into IHTA 1984, s 79(3)(a) which now permits trustees up to two years post the date of the ten-year charge in which to claim the exemption. Regrettably CTNH has not been updated to reflect this change and this should be corrected.

A claim in respect of a heritage property maintenance fund is dealt with in IHTA 1984, Sch 4, para 2. This specifies that the claim must be made in advance of setting up the trust whilst noting that there is no other situation when a claim be made in advance of the taxable event. The complex subject of heritage maintenance funds is considered in Chapter 21.

Protective or provisional claims


A claim to relief may be protective or provisional but irrespective, HMRC expect the claimant to pursue the matter ‘without undue delay’. If the claim is not followed up within a reasonable time frame, HMRC may proceed to charge IHT on the basis that the claim has been abandoned (see 18.2) but such action will only be carried out after proper notice has been given to the taxpayer

CTNH para 3.5 makes it clear that a formal or protective claim must include the following base elements:

  • a statement that the exemption is being claimed, specifying the event to which the claim relates;
  • confirmation that there is no present intention to sell the asset or assets;
  • particulars of each asset or group of assets covered by the claim; and
  • a brief statement why each asset is considered to qualify for exemption, including confirmation that proposals will be made for public access.

In addition, particulars of any previous exemption should be supplied, showing the date of the death or event, official reference, tax rate applicable, and details of the asset.