Inheritance Tax (or IHT) is one of the most complicated areas of tax law. As it is open to misunderstanding and abuse, HMRC specifically targets Inheritance Tax as an area for investigation.
In tax year 2018/19, 23% of taxable estates were investigated by HMRC.
Tax investigations are often triggered by:
1. Complex structures caught by the gift with reservation rules, the pre-owned asset tax rules or HMRC’s catch all General Anti-Avoidance Rules.
2. Arguments around the valuation of particular assets, particularly where HMRC believe assets have been undervalued.
3. Arguments around the residence or domicile of the deceased.
4. Arguments over whether particular tax reliefs are available.
5. Complex trust structures.
6. A deliberate decision by executors or the deceased’s family not to fully disclose all assets to HMRC.
We combine our knowledge of tax investigations and the complex Inheritance Tax regime to assist clients with managing Inheritance Tax investigations. We have particular expertise in:
1. Negotiating with HMRC to obtain the best result for the client where there is uncertainty about facts or interpretation of legislation.
2. Working with HMRC and other professional advisers where valuations are in dispute.
3. Mitigating penalties where errors are careless or deliberate.
4. Advising executors where they have been misled by other parties as to the extent of assets and lifetime gifts of the deceased.
5. Managing the risk of criminal prosecution where omissions are perceived to be deliberate by HMRC.
In addition to the above, we also regularly make voluntary disclosures of the deceased’s lifetime tax affairs where there have been deliberate or careless omissions, including advising on minimising the period of disclosure and mitigating penalties normally to nil.
Our depth of experience in these matters enables us to handle your affairs expertly and efficiently, providing value for money.
Speak to us if you are dealing with the administration of an estate that HMRC has enquired into, or if you require advice to avoid an investigation in the first place.