HMRC is increasingly cracking down on inheritance tax and actively targeting estates and beneficiaries, experts have warned.
Accountancy firm UHY Hooker Young’s analysis reveals that HMRC launched over 9,300 investigations into inheritance tax valuations in the last 12 months. Where tax was found to be outstanding, the average amount due was £24,600.
HMRC estimates that it raised around £70 million in 2010 through challenging the valuations of properties included in the estates of people who have died.
Inheritance tax usually must be paid if the assets of an estate are worth more than £325,000. Land Registry figures show that the average house price in the south east is now £274,000, whilst in London it’s £410,000. Mark Giddens, tax partner at UHY Hooker Young, commented that it is a misconception that inheritance tax only affects millionaires and said that in actual fact it could easily apply to much of middle England.
He added, “If a property is undervalued by £20,000, this could result in an additional £8,000 tax, plus, say, a 30 per cent penalty of the additional tax, making a total of £10,400. That is a considerable sum of money to raise when the estate and its beneficiaries may not be very cash rich.”
