A recent article set out several comments in relation to the changes to Inheritance Tax which were proposed in the Pre-Budget Report announced by Alistair Darling in October.

One of the main features of this was the ability to utilise any unused Inheritance Tax Nil Rate Band (currently £300,000) in respect of the prior death of a spouse or civil partner.

One example used was Mr A dying in June 2001 not utilising the annual exemption then available in respect of his estate, of £242,000 at that time, as he left all of his assets to Mrs A. She dies in June 2008 and double the 2008/09 exemption of £312,000 would be available to exempt £624,000 of assets on the death of Mrs A.

In some guidelines which have been issued by H M Revenue and Customs, they are making it clear their view is that there has to be detailed evidence available to the executors of Mrs A, in this example, of what were the precise circumstances relating to Mr A's estate, i.e. in terms of the usage of exemptions and so on.

A mere statement that everyone believes they were not used is unlikely to be accepted without copies of the papers drawn up in relation to his estate, both to obtain probate and to distribute the assets and, where appropriate, also in relation to any IHT forms submitted in respect of his estate. The eventual legislation may yet differ from the current proposals of course.

In the case of Mr and Mrs A, with there only being a seven year gap between the two deaths, it may be that the paperwork will have been retained either by the solicitors or the executors who dealt with Mr A's estate. However, if the solicitors have a policy of shredding files when they are more than six years old, the file may have been destroyed and if the family/executors did not carefully retain throughout the whole period copies of the documents produced at that time, they may find the Revenue will not accept that there is anything more than Mrs A's exemption available in respect of her death.

In some cases, if one party to a marriage or civil partnership dies relatively young, there may be a twenty or thirty year gap between the death of Mr B and Mrs B, for example, and what paperwork would exist now on Mrs B's death in June 2008 if her late husband died prematurely in June 1978?

It seems that the family members of a surviving widow or widower would be best advised to research the situation before the survivor passes away in case he or she has some knowledge of where paperwork may be stored. They may also like to contact the solicitors who dealt with the estate of the deceased parent to ascertain whether the file dealing with that deceased's estate has been retained and if it has to ensure that it is not now shredded.

It may be that if the executors of the deceased parent are still alive that they may have retained some paperwork, as may some other individuals who perhaps were beneficiaries of that estate, and a good deal of detective work may be required.

It would seem preferable to deal with that matter sooner rather than later as of course a number of individuals who may hold this paperwork may now be elderly and may be clearing out a lot of documentation before moving into some form of care or who may themselves die before the surviving spouse passes away.

The above is for general guidance only and no action should be taken without obtaining specific advice.

Andrew Kerr FCA, Pearson May, Chartered Accountants, Trowbridge, Chippenham and Bath