Under-valued probate house sales – Taxman clamps down
We’ve mentioned before about how the current austerity measures, and the lack of tax take, is influencing HM Revenue & Customs to look under stones. And so it is with the under-valuation of probate properties.
According to accountancy firm UHY Hacker Young, HMRC has insisted on revaluations, of probate properties, to collect more Inheritance Tax; it has also levied huge penalites where there is under payment. The firm says that HMRC conducted over 9,000 investigations into estates and beneficiaries last year, which brought in an additional £70m of IHT. Apparently, where executors have failed to demonstrate that they have taken ‘reasonable care’ to ensure a property valuation is accurate, the estate and its beneficiaries face penalties of up to 100% of the additional tax due, on top of the extra tax.
IHT is payable if the assets of an estate total more than £325,000. In many cases, the dead person’s property is an estate’s major asset. The advice to executors and administrators of estates is to get several property valuations, all of which will add to the burden of costs.
A spokesman for the HMRC has suggested that there is not a witch-hunt but that the investigations are actually routine checks to confirm the value offered.
COMMENT- this highlights the importance of getting an accurate valuation at the very start of the property sales process. Using more than one estate agent and online data, such as upto the minute sales and market comparisons, will provide executors and beneficiaries with the information they need to show that property has been accurately valued.