IHTM10073 - Bank and building society accounts - valuation of compensation rights on failure of bank or building society
The failure of a publicly owned bank or building society will usually mean that shares in the bank or building society will lose value. For IHT, this is likely to have two consequences:
- firstly for claims for loss on sale of shares and
- secondly for any compensation that might be paid.
IHTM34158 explains the background to the takeover of shares in Northern Rock and Bradford & Bingley. If any compensation for shares in either of these companies is included as an asset of the estate you should deal follow the guidance below:
Northern Rock (NR)
Former NR shareholders who died on or after 22 February 2008 no longer held NR shares, but were instead entitled to compensation for the loss of their shares. On 30 March 2010 the Independent Valuer appointed to assess the amount of compensation payable announced that the shares were worthless. You should follow the instructions outlined below, but note it is still possible that the matter of compensation may be taken before the European Courts
Where an IHT400 includes compensation for a holding of 1,000 shares or less in NR, you may accept the value offered without enquiry. This includes a value of Nil.
Where an IHT400 includes compensation for a holding of more than 1,000 shares in NR, you should refer the matter to Shares and Assets Valuation (SAV) for advice. You should quote the deceased’s name and date of death, the IHT file reference, the number of shares held and the value (if any) offered. There is no need to refer the file itself.
Bradford & Bingley
Former B&B shareholders who died on or after 29 September 2008 no longer held B&B shares, but were instead entitled to compensation for the loss of their shares.
Where a form IHT400 includes compensation for a holding of 1,000 shares or less in B&B, you may accept the value offered without enquiry. This includes a value of Nil.
Where a form IHT400 includes compensation for a holding of more than 1,000 shares in B&B, you should refer the matter to Shares and Assets Valuation (SAV) for advice. You should quote the deceased’s name and date of death, the IHT file reference, the number of shares held and the value (if any) offered. There is no need to refer the file itself.