A recent Freedom of Information request, published by The Telegraph has shown the confusion over complex Inheritance Tax provisions. The number of estates being investigated by the Revenue is at a four-year high, with numerous families having to suffer scrutiny.
In the 2019-20 tax year, HMRC collected £274 million as a result of over 5,000 investigations. To be clear, this figure is not the Inheritance Tax calculated and paid on all returns, but simply the amount collected by the Revenue after their investigations.
Where someone passes away, it is their Executor who generally must report to the Revenue about the person’s assets and debts, together with any reliefs or exemptions from Inheritance Tax which may apply.
The system is undoubtedly complex, with various hoops to jump through for even seemingly straightforward estates – and this only increases where the person owned a business or farm, had assets abroad, or was making lifetime gifts. With the law on Inheritance Tax filling innumerable books, it is no wonder that families are making even unintentional mistakes!
Even if you want to keep costs down by dealing with things yourself, it can pay dividends to seek a solicitor’s advice on the process – both to make sure that you are not falling into any Inheritance Tax traps and are maximising all the allowances available.