HMRC Challenges over Inheritance Tax

[heading centered=”yes” margin_bottom=”no”]Great care must be taken over the accuracy of information included in Inheritance Tax Returns as HMRC challenges over Inheritance Tax produce 23% more tax in the year 2012/13[/heading]

HMRC has increased the amount of extra tax it brings in through challenges to the valuation of estates for Inheritance Tax purposes by 23% in the year 2012/13. That is an additional £108m. This extra amount was taken through investigations into valuations and suggests that HMRC are taking a more aggressive attitude and improving the techniques used for challenging valuations.

For example, Land Registry records of the sale of other properties in the area can identify very simply whether a valuation put on the Inheritance Tax Return may be lower than it should be and the proposed valuation may thus be referred to the District Valuer for his attention. There may be simple reasons for this for example the property may have been maintained poorly by the deceased or local issues could affect the value of the particular property.

Tips to avoid unnecessary interest, penalties and indeed the costs of negotiating with HMRC:

• to carefully document the state of the property immediately after death including photos and certainly before any work is done to the property getting ready for sale or to improve it in any way.
• to obtain at least two market valuations from professionally qualified Chartered Surveyors who have experience of dealing with HMRC just in case their services are needed in any later negotiation. A market appraisal from a third Chartered Surveyor (often free) would also be helpful.

Please do not hesitate to contact me you if have any queries in relation to the above.

Judy Dyke
Director & Solicitor

Find out more about Judy here.