A speciality debt is a debt created by deed or instrument under
seal rather than by contract.
HMRC has recently amended its inheritance tax manual in respect of
its treatment of speciality debts. In the past, particularly in the
Isle of Man, and other offshore jurisdictions, speciality debts
have been utilised in corporate structuring and tax planning. The
previous treatment of speciality debts was that the situs of the
debt was where the deed was located.
HMRC now states that the debts will be treated as situated in the
place where the debtor resides and any claim that a debt secured on
UK assets is not UK situs property must be sent to HMRC's
technical team.
Commentators have stated that in cases where the speciality debt is
not secured on a UK situs asset then HMRC should not be able to
assert that the specialty is a UK situs asset. Unfortunately, no
consultation was held and HMRC have not provided any further legal
or technical analysis at this point.
