Investigations into the underpayment of inheritance tax (IHT) are increasingly on the rise.
Research from UHY Hacker Young suggests that rising asset prices such as property means that IHT can be very substantial and a lucrative source of income for HMRC. Their research shows that 5400 estates were investigated by HMRC in 2017-18, a 5% increase from the previous year.
Important points to consider when submitting an IHT return are:
- Noting the correct market value of each property.
- Ensuring that any claims for relief are valid.
- Ensuring that all assets are listed in the IHT return.
If HMRC find that assets have been omitted or undervalued, whether deliberately or from a lack of reasonable care, the beneficiary or estate would have to pay the full tax owed plus a penalty which may be a considerable amount.
It is therefore important that a professional valuation is carried out on all properties at the time of submitting an IHT return and that all assets are disclosed.