IHT simplification results in 80 pages of guidance!Make Text Bigger
An effort by the taxman to simplify inheritance tax valuations and forms has resulted in the publication of 80 pages of guidance notes.
Solicitors and estate planners specialising in IHT have seen a number of changes from HM Revenue and Customs in recent months – including a new online self-assessment system for dealing with tax returns for trusts and revision of many IHT forms.
HMRC is also looking at streamlining tax treatment of estates and trusts by combining separate offices dealing with IHT in to one department.
The problem seems to be that dealing with IHT issues is bewildering for many professionals, as well as bereaved families or friends acting as executors.
The latest IHT newsletter for estate professionals reveals that 84% of forms IHT400 – the tax form for reporting the accounts of a bereaved person’s estate – have mistakes that slow down dealing with the case.
HMRC also says failing to get the deceased’s name right on documents is one of the main causes of delays – often because their ‘official’ name is different from the name they are called by family and friends.
Procedures for IHT property valuations have also changed – and HMRC now require valuers to comment on the state of repair of any property that may affect value, like large gardens or access to development land that make a property attractive to builders.
The guidance also points out that marketing a property valued at £250,000 for £270,000 and receiving offers at the higher value may indicate the real value is £270,000, not £250,000.
“In these circumstances, HMRC recommends that you ask the valuer to reconsider and, if appropriate, amend the date of death value, taking into account such things as the length of time since the death and movements in the property market,” said HMRC.
“HMRC hopes that this will make it clearer to both practitioners and personal applicants that it is important to instruct a properly qualified person on the correct basis and to reconsider the initial valuation if any offers received suggest the property may be worth more.
“Valuing the property in this way will help prevent the risk of substantial undervaluation and HMRC charging penalties as a result.”
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To download the full 88 pages of guidance notes click here
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