I am dealing with an estate which required the submission of an IHT400 though no Tax was payable and the property value not “ascertained for capital taxes”, though a chartered surveyors valuation was provided.
The property has sold using a different agent for a higher value but still only 4 months after the date of death. I am proposing to submit a Corrective Account to HMRC to substitute the higher sale price as there would be less IHT to pay than CGT (and less hassle) as the estate had sufficient unused Nil Rate Band allowances to still utilise.
Having spoken to someone at HMRC, they seemed to indicate that they wouldn’t even entertain processing the Corrective Account and we just need to pay CGT. Has anyone else dealt with a matter like this successfully? I don’t want to delay paying CGT and picking up penalties if it takes HMRC months to consider the IHT position and then reject the Corrective Account!
Quoting from HMRC:
“Use form C4 to send in a correction when too much or too little Inheritance Tax has been paid on form IHT400 - if you also need an additional Grant of Confirmation for assets in Scotland use form C4(S) instead”.
IHTM10702 - Corrective account (C4): when is an account required (England, Wales and Northern Ireland)?
Strictly speaking a C4 should be completed in all cases where there is an amendment to the account.
You can insist on a C4 where:
- we are repaying money but we have any doubts that the repayment is due,
- there are lots of amendments or they are complicated,
- more tax is payable after a Form Cap A 5C (IHTM05083) has been sent to us, or
- assets that were given an estimated value in a reduced account (IHTM10471) are redirected to a chargeable beneficiary (IHTM10478).
If you have to ask for a form C4 and there is unpaid tax not in dispute, you might want to:
- raise provisional calculations, or
- suggest making a payment on account.
Malcolm Finney
Yes I’ve had HMRC refuse a C4 account and insist on CGT. We sent strongly worded correspondence, emphasizing that (in our case) the market certainly had not increased in the intervening period and the final sale price reflected the true probate value. Evidence from a valuer may be needed. In our case HMRC eventually rolled over and accepted the C4.
After all, if more IHT had been due on the higher sale price, HMRC would certainly have sought to apply IHT to the sale price as indicated in the IHT405
Yes, have been through this; it took several months of trying to convince it was not a CGT issue. In ‘our’ case the property was it turned out undervalued - we provided evidence of the full value as at date of the death and a corrective (with nil IHT to pay) was accepted.
A perfect example of an aspect of HMRC’s psychopathology namely intellectual dishonesty
Jack Harper
Or perhaps that they are unable to handle two separate taxes at the same time.