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The taxman is pushing to take a tougher stance on inheritance tax valuations, in a move that could see individuals’ estates landed with bills running into the thousands. Following meetings with industry experts, HMRC recommended that individuals should arrange three estate agent valuations, up from two under the current regime. Tax officials believe that increasing the minimum number of valuations required will go a long way in demonstrating that the liable persons exercised “reasonable care.” But some experts say HMRC is overreacting, arguing that most people would think the use of two estate agents is sufficient to signal that reasonable care was taken. Should an IHT property valuation be deemed incorrect, such as being predicated upon a quick sale, penalties are 30% of the additional liability on top of the extra tax owed. However, under the current regime there is a 12-month window in which IHT valuations can be submitted before any penalties for a late account arise. HMRC has also said that if instructions for the IHT property valuations were given on the correct basis, then any uplift in value that is agreed is unlikely to attract a penalty. The taxman will also look at whether professional advice was sought and whether the valuer’s attention was drawn to the property’s features, like development potential. Alongside the individual asking questions about any unusual aspects of the valuation, it is these issues HMRC will scrutinise to determine whether reasonable care was taken. Nov 10, 2009 Email this article Printer friendly page Previous Page
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