A question which often arises when dealing with taxable estates is the question of when the executors can be sure that HMRC won’t ask for more money.

Sensibly, they want to know for definite before paying out all the money.  Until now the question has been buried in HMRC procedural rules, but essentially the answer has been 6 months after the date the tax return (the “IHT400”) is submitted.  Unhelpfully, HMRC don’t issue clearance letters as a matter of course. 

When submitting the IHT400, we obviously aim to anticipate and deal with any queries which HMRC may have, so as to ensure that the return goes through as smoothly as possible.  However it is in the nature of these enquiries that they may arise unexpectedly; it is also the case that nine times out of ten HMRC will refer the value of land to the District Valuer’s Office. Accordingly, we are never able to guarantee to executors that enquiries won’t arise; it is simply a matter of waiting to see what comes back. However, the reality is that HMRC are significantly understaffed. Therefore it is usual for there to be long delays and inconsistencies in the way matters are dealt with. 

HMRC have now tried to deal with this problem. In future, when acknowledging receipt of the IHT400 they will stamp the receipt with the date by which they must raise enquiries; after that executors are safe to assume all is well. This date will be 12 weeks from the date of receipt, a significant improvement. 

Ordinarily the staff at the Inheritance Tax section of HMRC are very pleasant to deal with and it must be difficult for them knowing that they are giving a poor service. This new development is a welcome attempt by them to deal with a common problem. 

If you would like advice relating to a taxable estate, please contact the Wills, Trust and Probate department at Myerson on 0161 941 4000 or email us lawyers@myerson.co.uk.

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