Commentary

I3.235 Statute barred and unenforceable debts

IHT, trusts and estates

I3.235 Statute barred and unenforceable debts

I3.235 Statute barred and unenforceable debts

Payment of a statute barred debt is prima facie a transfer of value, but HMRC practice is to allow a deduction for these provided the debt would have qualified for deduction had it not been out of time, and is actually paid1. Thus payment of a statute barred debt in the debtor's lifetime is not taxed, and payment by personal representatives after the debtor's death makes the debt deductible from the value of his estate. HMRC will require evidence that the payment has been made2.

Unenforceable debts, such as most gambling debts3, liabilities unenforceable for

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