Pictured: Mark Hildred
Moore Thompson chartered accountants are reporting that in a bid
to squeeze the last possible penny out of taxpayers, HMRC is
scrutinising Land Registry data on house purchases and sales to
check people are not avoiding tax.
Mark Hildred, Managing Partner at the firm said: "This is
affecting those who receive a gift or inheritance to buy a
property, or who use this money to pay a sizeable amount off their
mortgages.
"Figures released last month show that HMRC is actively
targeting estates and beneficiaries for underpayment of inheritance
tax (IHT). Last year, the taxman investigated 9,368 house price
valuations and clawed back almost £70 million in IHT."
IHT is levied at 40 per cent where the assets, minus any debt,
of a person's estate exceed £325,000, or £650,000 for
couples. Estate beneficiaries, who are often the children and
families of the deceased, face penalties of up to 100 per cent of
the additional tax liability, in addition to the tax due, if HMRC
investigates an IHT property valuation and finds it is incorrect
because sufficient care was not taken in obtaining it.
If a property is sold for less than the valuation, the estate
can come back and ask for the value to be revised. Executors and
beneficiaries are being advised to get several valuations from
professional valuers or chartered surveyors.
HMRC has said that it would open an inquiry based on a series of
risk factors; part of the remit of an inquiry would be to check
whether the declared income correlated to the individual's
lifestyle. In the case of gifts, they would look for evidence such
as a copy of the donor's bank statement.
When giving gifts, it is suggested that donors pay by bank
transfer and have supporting documentation to give to their lawyer
and accountant, as many people will have no provable record of
giving gifts to children or grandchildren. Gifts of unlimited
amounts can be given free of tax if the donor lives for another
seven years.