HMRC carried out over 9,000 inheritance tax (IHT) valuations during 2010, according to research by accountancy firm UHY Hacker Young. These investigations raised an additional £70 million for the tax man, at an average cost of an extra £24,600 in tax per undervalued estate.
Beneficiaries are generally liable to pay IHT when the value of the inherited estate is over £325,000. If HMRC finds that the estate administrators have not taken due care in valuing the estate, and it has been undervalued, it can impose a fine on the estate of up to 100% of the additional tax due, which the beneficiaries will have to pay on top of the additional tax.
As the accountancy firm points out, with HMRC actively targeting executry estates and beneficiaries, accurate valuations are more vital than ever. Professional advice is essential.