Inheritance tax clearance

An executor instructs solicitors to obtain the grant of probate, which he does, and he also obtains iht clearance in IHT30. The executor deals with the actual estate administration.

5 months after obtaining clearance the executor receives a letter from the district valuer saying Hmrc are checking the value of a property given in the IHT400, and claiming it was too low, resulting in an extra £18,000 IHT and interest being demanded.

The executor is told by his valuer to accept the valuation, which he does, not realising the consequences of having previously been given clearance, which means no more IHT can be demanded in relation to the assets returned previously, simply on the basis of valuation.

We are writing to ask for a refund, and would be interested to hear if anyone else has had experience of similar circumstances, and whether HMRC gave a refund.

Whilst I have not had experience of a similar situation to my recollection, the IHT 30 at the foot of page 2 states: –

“This certificate is given under Inheritance Tax Act 1984 s239(2) or Finance Act 1975 sch.4 para.25 (2) or Finance Act 1894 s11(2) and does not itself constitute a determination of values of individual items for any other HM Revenue and Customs purpose. In particular, the issue of the certificate does not necessarily mean that values have been ‘ascertained’ or that values may be taken as market values for Capital Gains Tax within the provisions of section 274 and paragraph 9, schedule 11, Taxation of Chargeable Gains Act 1992. This certificate is not valid in certain circumstances, such as in the case of fraud or failure to disclose material facts or if further tax becomes payable as a result of an instrument of variation - see section 239 (4) Inheritance Tax Act 1984.”

In my view therefore HMRC cannot claim any further inheritance tax and should repay any overpaid tax. However getting a repayment of tax from HMRC is a different issue. I am still waiting for a refund which I have mentioned on this forum sometime ago and which HMRC acknowledges was incorrectly assessed by them. It was paid in my absence but I would’ve paid it in any case as I wanted to get the IHT421 to get the grant of probate. Best of luck therefore.

Patrick Moroney