SolvedIHTM33022 | Loss on sale of land: procedures: issuing form IHT38
From HM Revenue & Customs · Inheritance Tax Manual
The relief should normally be claimed on form IHT38 to ensure that all necessary information is provided. In most cases you will find out about a claim for loss on sale of land relief when you receive the form IHT38 from the taxpayers. You will need to follow the instructions at IHTM33031 onwards for handling a claim for relief.
You should send the taxpayers a form IHT38 to complete if:
they tell you that they wish to claim the relief
the taxpayers tell us about a lower value than originally returned or agreed even if the relief is not specifically claimed (unless the value is still being considered by the VOA (IHTM23002).
the VOA tells you about a possible claim.
Where unrepresented personal applicants (IHTM02161) are dealing with the case and you become aware that an interest in land (IHTM33061) is being sold for less than the date of death value, you should:
bring the relief to their attention
send them a copy of form IHT38.
warn them about the risks of making a claim that may not be in their favour (IHTM33013), if this might apply.
You should not ask the taxpayer to complete a form IHT38 in the following circumstances
the date of death value is still being considered by the VOA, when you should first report the sale price to the VOA (IHTM33035)
where the taxpayers claim to substitute a higher sale value (IHTM33026) and no tax is due on the sold land.
where you are aware, or believe, that more than one interest in land is being sold, unless you are satisfied that the claim will not be disadvantageous (IHTM33013) to the taxpayer.