Grant on Credit
There are extreme and unusual cases in which the Personal Representative and other beneficiaries of the will are unable to raise the initial funds to make an initial Inheritance Tax payment. This means that they are in effect unable to gain Grant of Probate, even if they have been named as the Executor of the will (see related article – ‘Grant of Probate’), Being unable to gain Grant of Probate means that they will thus be unable to access the Estate and funds from the Estate, making it further impossible, in all likelihood, for them to make any future payment of Inheritance Tax
A Rare Procedure
Instances such as the above are so rare that information regarding what to do in the case that you cannot raise any money to pay the first instalment of Inheritance Tax is very hard to come by. Yet, in this instance the beneficiaries of the Estate face not being able to gain access to the Estate that they have been left in their will.
The reason this is so very rare a case is that firstly, if someone has enough property assets for their Estate to be liable for Inheritance Tax they are highly likely to have at east enough in liquid assets to pay the first instalment of due Inheritance Tax and as secondly, if it is known that property assets exist valued in excess of the nil rate band of Inheritance Tax, you should have no trouble in borrowing money against the value of those property assets in order to pay the initial sum of Inheritance Tax. Presuming you have first tried to gain a loan to pay the first instalment of Inheritance Tax, and assuming that you cannot get any money for the first instalment from the liquid assets of the deceased, your next step is to contact the Tax Office. From here you must submit your IHT200 outlining the amount of tax you are due for together with a letter detailing your situation. From there you can be referred to debt management.
Each case will then be investigated on its own merits with all options being looked into. If the Tax Office is then confident that you have a genuine case they will offer you ‘Grant on Credit’, meaning they are offering you the Grant of Probate ‘on Credit’ in lieu of your first Inheritance Tax payment. This grant will then enable you to access all of the assets of the deceased (just as the ‘Grant of Probate’) meaning that you can then begin to pay the first instalments of Inheritance Tax as well as dividing up the Estate according to the last Will and Testament. However, the latter can only be done when the Tax Office is confident that you will make the full Inheritance Tax payments. Until then a ‘Land Charge’ may be placed on any property in order to prevent it from being sold prior to tax being paid. This way it is ensured that the property will not be sold and the assets distributed and spent before provision for tax payment have been made.