Property valuations targeted in inheritance tax enquiry

10 June 2011

HM Revenue & Customs have investigated 9,500 inheritance tax valuations in the past year, raising an additional £70mill by challenging probate property valuations. Inheritance tax is payable if the assets of an estate total more than £325,000. In many cases, the deceased's property is by far the major asset in an estate.

HMRC advises the administrators of estates to get several property valuations for the purposes of IT calculations.

Mark Giddens, accountancy firm UHY Hacker Young partner, said: “If a property is undervalued by £20,000, this could result in an additional £8,000 tax, plus, say, a 30% 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.”

A spokesman for HMRC said: “Only about 3% of estates pay any inheritance tax at all, but when the value of the property can materially affect the tax payable, it’s only right we confirm the value offered. This is not an investigation but a routine check, which in the vast majority of cases simply confirms the value offered.”

Russell Cade, director of Move with Us, which specialises in selling probate properties on behalf of trusts, corporations, executors and beneficiaries, said: “The news that HMRC is investigating the valuation of properties left by the deceased highlights more than ever the importance of getting an accurate house valuation at the very start of the property sales process.

“Using more than one estate agent, as well as online data such as up-to-the-minute sales and market comparisons from multiple sources, will give the beneficiaries and executors the information they need to prove the property has been accurately valued."


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