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HMRC updates their guidance for IHT400s and the Inheritance Tax...

HMRC updates their guidance for IHT400s and the Inheritance Tax process

HM Revenue & Customs (‘HMRC’) have produced a Special Edition of their Trusts and Estates Newsletter for April 2018:

In the Newsletter, HMRC set out their new procedures for dealing with IHT400 Inheritance Tax Returns.  

HMRC’s key message to Personal Representatives is to be thorough when preparing the IHT400 and to only correspond with HMRC when full and detailed information has been obtained. 

There are a number of key points to note:

  1. If HMRC accept the IHT400 at first glance, they will confirm this in writing;
  2. If HMRC are going to look into the IHT400 in more detail, there will be a 12 week period whereby they will aim to ask any questions they may have, or they will raise a compliance check if necessary. 
  3. Importantly, if Personal Representatives have not heard anything within 12 weeks, Personal Representatives can ‘…assume HMRC have no questions to ask…’.
  4. HMRC will no longer issue a clearance letter when they have finished their checks. 
  5. Personal Representatives can still request formal clearance, however HMRC ‘…would not normally expect you to apply until at least a year has passed since the date of death’.
  6. If Personal Representatives think values in the estate need correcting, HMRC request that this only happen when the Personal Representatives are certain no further changes are likely to occur, or 18 months has passed since the date of death, whichever is earlier.
  7. HMRC will not be able to deal with the IHT400 if Personal Representatives have not provided HMRC with all of the information they need, which in some cases may delay obtaining a Grant of Representation.

Preparing an IHT400 for a deceased’s estate can appear at first glance to be a fairly straight forward task, and it often is.

However, depending on the assets and liabilities contained in an estate, IHT400s can quickly become very complicated and care is needed to ensure the IHT400 is presented to HMRC in accordance with their detailed requirements.

This is particularly the case where Personal Representatives are hoping to claim Agricultural Property Relief or Business Property Relief for Inheritance Tax purposes.

If you require any guidance on how to correctly prepare an IHT400 and how to maximise your chances that HMRC accept the values you submit without raising any questions or compliance checks, speak to a member of our Wealth Management Team on 01482 324591.