THE TAXMAN launched almost 10,000 investigations into inheritance tax valuations and actively targeted estates and beneficiaries, UHY Hacker Young has claimed.
The accountancy firm analysed HMRC figures that showed there had been 9,368 investigations into inheritance tax valuations over the last year. This yielded £70m additional tax raised, with beneficiaries made to pay an average of £24,600 extra per case, the firm claimed.
IHT is typically paid on an estate worth £325,000 and over. Beneficiaries could face fines of up to 100% of the additional tax liability if an IHT property valuation is found to be incorrect and the taxman considers that ‘reasonable care’ was not taken in establishing it, the firm said.
Mark Giddens, a partner at the firm, said: “Inheritance tax doesn’t just affect millionaires, but most of middle England where the estate may consist of little more than an average size property, and a family member may take on the task of administering the estate themselves.
“If a property is undervalued by £20,000, this could result in an additional £8,000 tax, plus, say, a 30% penalty of the additional tax, making a total of £10,400. That is a considerable sum of money to raise when the estate and its beneficiaries may not be very cash rich.”
A HMRC spokesman said: “Only about 3% of estates pay any inheritance tax at all but when the value of the property can materially affect the tax payable it’s only right that we confirm the value offered. This is not an investigation but a routine check which in the vast majority of cases simply confirms the value offered. This helps to protect both the Exchequer and the taxpayer.”
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