Almost quarter of estates investigated over IHT – the reason why you should use us to conduct probate for you.
In the 2018 to 2019 tax year, HMRC opened 5,537 inheritance tax (IHT) investigations, which equated to almost one in four (23%) of the 22,000 estates on which the tax is due
This was a 3.4% increase on the 5,354 investigations opened by the Revenue the previous year, according figures gained from a freedom of information request by wealth advisers Quilter.
Gordon Andrews, tax and financial planning expert at Quilter, said that IHT has long been recognised as “complex and at times deeply unfair”, adding that on top of this there is also one in four chance of being investigated by HMRC.
“Over the past number of years politicians have been keen to show they are cracking down on tax-dodgers and IHT is one of the departments that HMRC has been throwing its resources at,” Andrews said.
“More often than not, people aren’t deliberately trying to defraud HMRC and given the current complexity of the IHT system it’s really no surprise if things go awry.”
He gave the example of HMRC challenging the IHT-free status of death benefits in the event that someone in ill health passes away within two years of transferring a pension.
“This is absurd at best and perverse at worst as it is essentially penalising people for appropriate tax planning,” Andrews said.
Quilter also noted that the number of investigations has increased by 7.8% since the introduction of the residence nil rate band in April 2017.
In August last year, government figures showed that receipts from the controversial tax had hit a record high of £5.2bn.
At the time, a spokesperson from the Office for Budget Responsibility said, “The effect of continued growth in asset prices is partly offset by the rising path for the main residence nil rate band from 2017/18 onwards.
Earlier this month, the Office for Tax Simplification called for an overhaul of IHT,suggesting, among other things, that the seven-year period during which a lifetime gift may be subject to IHT to be reduced to five years.
The unpopularity of IHT led to the OTS receiving more responses to its request for views on the tax than for any other consultation.
Previously, the then chancellor, Philip Hammond, had tasked the OTS with reviewing IHT to come up with a way of simplifying the controversial tax.
HMRC has been contacted for comment.
As an executor you are PERSONALLY LIABLE for any accounting mistakes and remember, HMRC has up to 4 years after death to start an investigation.
Thy Will Be Done will conduct all of the probate work on our clients’ estates for just 1.75% inc v.a.t. of the total estate value which is not only extremely competitive but sets your mind at rest regarding the daunting task of being nominated as an executor within a loved one’s Will.