IHTM28322 - Liabilities: investigating form IHT419: investigating loans from friends and relatives

This is an area where you need to pay particular attention to the facts because of the close relationship between the lender (who may also be a beneficiary under the Will) and the deceased. Although the deceased may owe money, the nature of the arrangements may mean that the debt is not allowable for Inheritance Tax purposes. When investigating loans from friends and relatives you will need to consider:

• whether the loan is properly allowable (IHTM28323) as a deduction, and
• if the money was used for a specific purpose that it has been reflected in the estate.

You should raise enquiries if the information received is inadequate and you need more details to consider the claim, or if you are unable to accept the claim and worthwhile tax is at stake. You should focus on obtaining the specific information you need for your enquiry.