HMRC steps up IHT clawback

HM Revenue & Customs (HMRC) has stepped up its investigations into those it suspects of underpaying Inheritance Tax (IHT). Last year it clawed back £326 million – a 28 per cent increase on the previous 12 months.

According to figures released this month under a Freedom of Information (FoI) request, HMRC opened 4,258 enquires into families regarding IHT.

This is up from 3,574 the year before, although the COVID-19 lockdown did impact investigations being carried out, with HMRC confirming that the number of IHT enquiries fell during the first six months of 2020/21.

IHT is charged at 40 per cent of the value of a person’s estate above a specific threshold, as determined by the nil-rate and residence nil-rate band. Taxpayers must pay the IHT due on the deceased’s estate above this threshold.

One way to limit the amount of IHT that needs to be paid is for people to keep good records of any gifts or transfers they have made, as there is a range of tax reliefs available, as well as verifying the value of their assets.

They should also ensure that their Wills are updated to ensure beneficiaries can justify any money or assets they receive.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Even if tax issues in relation to a deceased’s estate are not controversial, there can sometimes be the bitterest of disputes between beneficiaries.

“In contested probate cases, forensic accountants often play a vital role both valuing businesses and reporting on all aspects of the deceased’s finances.

“If maladministration of the estate is suspected this can also be investigated by analysing bank statements and other key source documentation.”


Source(s): FT

Posted in The Forensic Blog.