The Times recently reported on the HM Revenue & Customs’ (HMRC) investigation into over 2000 estates, resulting in the recovery of over £170 million in inheritance tax (IHT) that had been underpaid.  (The original article can be found here: HMRC on the hunt for families who didn’t pay inheritance tax (thetimes.co.uk))

The HMRC has considerable powers to investigate estates where it suspects IHT may have been underpaid or not paid at all due to assets being undervalued and/or deliberate or inadvertent omissions or errors.

Even when an estate seems to be straightforward (and may also appear not to require submission of an IHT account), it is easy to overlook particular elements that should be included in the value of the estate, which could result in the need to submit an IHT account, and may also require payment of IHT. As well as looking into UK and foreign investments and property, one of the key elements that HMRC investigates are gifts made by the deceased during the seven years before their death, which can easily be overlooked by personal representatives administering an estate.

Should the HMRC find that IHT has been underpaid, not only will they require payment of the IHT shortfall, but they also have powers to impose penalties and charge interest on the late payment of the amount of IHT due. The current interest rate being charged is a substantial 7.75% which, along with penalties, could add a significant amount to the overall IHT bill!

As we noted in our article, Are you appointed executor under a Will? | Gordons Partnership (gordonsols.co.uk), if you are appointed an executor or administrator on an estate, you are under a legal duty to fulfil your role responsibly and in the proper manner. In England and Wales, you could be held personally and financially liable for any mistakes made.

Inheritance Tax Solicitors in Guildford and London

Whilst it is not necessary to instruct a solicitor to assist you with the administration of an estate, if you are having to deal with a complicated estate, an estate where you believe the deceased may have made gifts that could be subject to IHT, or you simply want to ensure that you have included everything in the estate that should be included, you should consider seeking professional advice.  Our probate professionals are here to assist you, whether you need one-off advice on a specific matter, need assistance in completing an IHT account or need help to fully administer an estate.

To speak to our specialist Probate Solicitors, call us on 01483 451 900 or 020 7421 9421. Alternatively, you can email us or make an online enquiry, and we will call you.

About the Author

Habiba Ahmed

Habiba Ahmed

Associate