Tuesday 23 October 2012

HMRC IHT 1 - Undervalued property 0

HMRC are under pressure to increase the tax take. I regularly write about various ways in which they do this, such as when they announce increased staffing in a department. An accountancy firm, 'UHY Hacker Young' recently sent a Freedom of Information request to HMRC asking:
"how much additional tax had been raised as a result of challenging property valuations" submitted in probate valuations.

For 2010/11 it was £70 million but was up to £88 million in 2011/12
The average uplift per case was around £27,000. There were 3,250 cases.

This indicates HMRC is challenging around 1 in 5 taxable estates.

Technology has brought increased ways for HMRC to track and then query estate & property values - in many cases Stamp Duty data was used. HMRC's ability to withhold probate is an effective means of pressuring prompt payment and this trend shows no sign of tailing off - as at the start of this article, my opinion is this type of challenge, across different assets in IHT planning (think auction sale records for chattels etc) and tax in general will increase in these difficult economic times.

As UHY Hacker Young summarised, probate - and I would argue IHT planning in the first place - is not an amatuer exercise