HMRC to launch 'investigations' into three things in inheritance tax crackdown
Thousands face an inheritance tax crackdown as HMRC suspects underpayments worth £325 million. The figure, known as 'tax under consideration', was revealed by national accountancy group UHY Hacker Young.
The tax authority will target three main areas where wealthy families are suspected of avoiding inheritance tax: undervalued properties, failing to declare valuable items such as jewellery or paintings passed to relatives, and false claims about the timing of large cash gifts.
UHY Hacker Young, the national accountancy group, has said this figure could increase “significantly” in future years following IHT increases from April 2026. UHY Hacker Young Partner Neela Chauhan said that sharp increase in taxes is often followed by an increase in tax avoidance and tax evasion, as people try to blunt the impact of the rise.
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UHY Hacker Young Partner Neela Chauhan said: “We are expecting that the number of disputes between taxpayers and HMRC over IHT will increase, partly because of an expected increase in IHT-focused tax investigations from HMRC.”
In the tax year ending 31 March 2024, HMRC brought in an extra £285m in tax from investigations into the underpayment of IHT, 14% up on £254m collected from IHT-focused tax investigations in the previous year. UHY Hacker Young said the types of issues that HMRC will look for IHT Investigations include three things.
It listed deliberately undervaluing a residential property that is part of an estate by exaggerating the state of disrepair or basing the value on an out-of-date survey. and failing to declare in an IHT form cash or other valuables such as jewellery or paintings passed on to relatives, for example by a lay executor.
The third and final crackdown will be claiming a large cash gift was given seven years ago (and therefore outside of IHT) when in fact the gift was given much more recently and therefore should be subject to IHT.