A speciality debt is a debt created by deed or instrument under seal rather than by contract.

HMRC has recently amended its inheritance tax manual in respect of its treatment of speciality debts. In the past, particularly in the Isle of Man, and other offshore jurisdictions, speciality debts have been utilised in corporate structuring and tax planning. The previous treatment of speciality debts was that the situs of the debt was where the deed was located.

HMRC now states that the debts will be treated as situated in the place where the debtor resides and any claim that a debt secured on UK assets is not UK situs property must be sent to HMRC's technical team.

Commentators have stated that in cases where the speciality debt is not secured on a UK situs asset then HMRC should not be able to assert that the specialty is a UK situs asset. Unfortunately, no consultation was held and HMRC have not provided any further legal or technical analysis at this point.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.