HMRC has updated its Inheritance Tax Manual at IHTM27079, 27080 and 27091 (29 January, 2013). They have been updated to reflect a change in approach by HMRC to the treatment of debt.
IHTM27079 now states that “In the past, HMRC's approach to the situs of specialty debts has been that this depends on where the relevant document is found. We have now been advised that our previous approach is unlikely to be correct. We now believe that these debts are situated where the debtor resides.”
At IHTM33026 the guidance has been updated following the ‘Stonor’ case. It now highlights that HMRC will not allow a claim to substitute a higher sale value for land or buildings sold within three years of the date of death.