
Under the Probate process you must submit an Inheritance Tax (IHT) form to HM Revenue & Customs (HMRC), unless the estate is small and there is no tax charge, as well as making an application to the Probate Office.
HMRC operate a ‘process now, check later’ policy – i.e., they look at the form submitted, check it makes sense, confirm you have paid any IHT due, and then the Probate Office can proceed with the application.
At this point, HMRC then have up to three months to open up an enquiry, should they see fit. Our probate specialists have recently been dealing with two enquiries; the first we have had for some time.
Enquiry: Significant property portfolio
The first enquiry relates to an estate encompassing a significant property portfolio, which has been referred to the District Valuer, a local government property expert who will advise his thoughts.
We are confident that, as our client obtained detailed professional valuation of the properties, the figures will not change. However, if this turns out to be the case, HMRC should find it difficult to charge a penalty as the Executors can demonstrate that they took reasonable care in submitting the form.
Enquiry: Valuation of shares in an unqualified company
The second enquiry concerns a valuation of shares in an unqualified company; something which is not an exact science, and so requires professional judgement.
The company concerned is an investment company and, therefore, does not qualify for Inheritance Tax Relief.
As we are part of George Hay Chartered Accountants, we prepared the valuation and can see the error in the tax inspector’s methodology. We are confident we can resolve this and, even if there is a slight movement, HMRC again will not be able to charge penalties.
IHT form enquiries – a new trend?
It would be interesting to see if this is a new trend, considering that the new Government have made noises about adapting their approach to correcting taxpayer’s mistakes.
We do not have a problem with questions being asked; our problem is with the delay. Our last enquiry regarding a property valuation and whether it qualified for relief took over two years to resolve.
In the end, HMRC concluded that it was in agreement with what we had submitted and that there was no adjustment to make, but that the estate could not be distributed.
It is therefore important that all IHT forms are completed accurately, and with due care, which we at GH Probate obviously ensure is the case.
For assistance with Probate administration contact Jenna Boddington or Barry Jefferd on 01480 426500 or email probate@georgehay.co.uk.
GH Probate Ltd is authorised to carry out the reserved authority of non-contentious probate by the Institute of Chartered Accountants in England and Wales.