HMRC's Change Of View On Specialty Debts

H M Revenue & Customs ("HMRC") has published a change of view on the treatment of specialty debts for inheritance tax ("IHT") purposes which could mean that specialty debts not previously within the scope of IHT, will now be chargeable.

On 23 January 2013, HMRC published, without consultation, an update to their guidance on the status of specialty debts for IHT purposes. A specialty debt is a debt recorded in a deed. Such debts are often used for IHT planning on the basis that, as confirmed in HMRC's previous guidance, if the deed is kept in a foreign jurisdiction, the debt is treated a non-UK situated asset for IHT purposes. Non-UK situs assets are outside the scope of IHT for non-UK domiciled individuals and trusts with a non-UK domiciled settlor.