HMRC Investigations: Inheritance Tax Disputes

Inheritance tax is imposed on the estates of people who have died and are handing assets over to beneficiaries so long as the estate is of a certain value. Therefore, it is important that the evaluation of the estate is done accurately as HMRC are able to access documentation for a long time.

HMRC may check on estate valuations 20 years after payment, HMRC will notify a taxpayer in writing when it commences to examine their tax affairs. Typically, if HMRC starts a formal civil investigation, a letter will be sent requesting more information. For example, if you receive a request for information, it is important to contact an expert tax lawyer.

It is crucial that once under review, specialist Tax Investigation Lawyers are instructed. We regularly liaise with HMRC at formal meetings, agree what the scope of the disclosure should be and prepare the report on your behalf and reach a civil settlement with HMRC.  

When will inheritance tax be levied?

Inheritance tax will only be imposed if the estate is valued at over £325,000. The evaluation will cover more than simply the home or mortgage, an estate can be made up of valuable possessions, jewellery or cash assets.

How is the valuation of an estate completed?

To value an estate the parties involved must list out all the assets and work out their value at the time of death then deduct any debts and liabilities. Those affected should keep records of how the valuation was calculated i.e. an estate agent’s valuation. It is important to do so as HMRC can request records up to 20 years after the inheritance tax is paid.

Any costs that are incurred following death such as solicitors fees, cannot be deducted from the estate’s value for inheritance tax purposes.

Due to the broad nature of some estates, this can make a valuation much more difficult to complete however HMRC have permitted an extended time frame to do so. The legislature have stated that the valuation of the esstate can take anywhere from six to nine months. This time frame may also be extended further for more complicated estates.

If there is no inheritance tax to pay an estate will not need to be valued straight away, however, if inheritance tax is due the parties will need to send in the inheritance tax forms within one year.

When does the inheritance tax need to be paid?

The bill will need to start being paid by the end of the sixth month after the person died.

It should be noted that inheritance tax payments can be started prior to the completion of the valuation.

How can an overall inheritance tax bill be lowered?

  • Leaving a legacy of a certain size to charity;
  • Putting assets into a trust for heirs;
  • Leaving the estate to a spouse or civil partner;
  • Paying into a pension instead of a savings account; or
  • Regularly giving away up to £3,000 a year in gifts

Expert London Tax Lawyers

If you need HMRC Tax Disputes advice, we are available to aid you at every stage of the HMRC appeals process. Members of our legal team have first-hand experience and working knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations, throughout the HMRC internal review process and in front of the Tax Tribunal. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect including developing a strategy.

We are experts in adeptly presenting evidence and employing bespoke arguments combining the facts of your case, previous cases and current legislation to ensure your appeal is a successful one. We provide urgent advice and representation to clients from our unique expert team of established tax and duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email [email protected].

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