HMRC’s inheritance tax investigations brought in an additional £285 million in tax in the year ending 31 March 2024, up 14% from £254 million the previous year. The increase in the amount of inheritance tax collected comes despite the number of investigations falling to 3,028, down 4% from 3,163 the previous year.
HMRC’s focus on inheritance tax is yielding a greater compliance take from fewer investigations suggesting that their efforts to deal with inheritance tax evasion are working. The growing complexity of inheritance tax cases and larger sums being recovered suggests that HMRC is zeroing in on high-value estates – very much including estates that may have been presenting over-optimistic valuations of assets.
The Government’s decision to dramatically increase the range of assets and estates hit by inheritance tax in the October 2024 Budget could easily create far more investigations for HMRC.
Many of these investigations stem from disagreements over estate valuations and the application of reliefs, such as Business Property Relief. HMRC is increasingly investigating Inheritance Tax Returns using resources like HM Land Registry, Google Street View and data from the Trust Register Service – which all trusts must comply with – to correctly value estates.
Inheritance Tax evasion and avoidance may be anticipated to increase substantially with the Chancellor pulling more families and assets (such as farms, businesses, AIM portfolios and pensions) into the inheritance tax net in the Autumn Budget.
Stephen Parnham
