IHTM29073 - Yield – Compliance and Litigation – what should be recorded as yield?

Voluntary amendments

When a case is referred to Compliance, the risk assessor sends a letter to the customer telling them the case has been referred. This alerts the customer to the fact that the case will be scrutinized carefully and that enquiries will be raised. Once this letter has been sent, any additional tax and interest gained through amendments volunteered by the customer should be regarded as yield. An exception to this is where the customer volunteers new debts to the estate. We do not regard the volunteering of new debts as an adjustment to yield as we assume the customer would have reported them anyway.

Similarly, we would also assume that any new reliefs or exemptions that are not related to our intervention work would have been reported by the customer anyway. We would not record these as yield adjustments. However any new exemptions or reliefs that are claimed against yield adjustments should be recorded. For example, if you have discovered additional lifetime transfers you should record the value of these after deducting any annual exemptions claimed against them.

Amendments as a result of our work

You should record adjustments to yield and any interest yield where

• You discover additional assets, amendments and changes in value as a result of the enquiries you have raised with the customer.
• The amount of tax changes because you have disallowed or limited an exemption or relief.
• The value of the chargeable estate is increased because of grossing or interaction additions that the customer had not calculated (or had calculated incorrectly?) before delivering the account. But, adjustments that need to be made because of simple arithmetical errors in the account should not be recorded as yield
• You ‘save tax’ by denying a relief, exemption or deduction that the customer has claimed after the account was delivered. You should record the value of the denied reduction to the estate, even though the tax position may not have changed since the account was delivered. You should also record any interest that would have been repaid on the tax saved as interest yield.
• The original values have changed as a result of a referral to valuation specialists such as the District Valuer or SAV.

Late accounts

Yield gained as a result of our work should be claimed on accounts submitted after the due date ( IHTM29026).

Original amount of tax due

You should claim the full amount of tax originally due on the account and the interest charged where we have initiated contact with the customer and the account is delivered after the due date.

You cannot claim yield where

• the account is received inside the period for delivery, either by voluntary submission or after we requested it, or
• the account is received outside the period for delivery, but the customer voluntarily informed us that an account was due (putting money on deposit is sufficient) and delivered it within the six months after that.

Where money was put on deposit but an account was not received within six months of that date, and IHT have then had to request the account because it was late, record all of the tax and interest as yield regardless of the amount of deposit.

Additions

Where there are any changes to the figures originally returned, including those volunteered by the customer, the resulting adjustments to tax and interest are adjustments to yield.

Penalties

Penalties should be recorded individually on the separate penalties system within Compass ( IHTM36371).

Penalties are regarded as yield, unless they have been taken for the following reasons

• Failure to make an account
• Failure to keep records
• Failure to comply with information notices

Future events on lifetime and settlement cases

If you are working an enquiry on a settlement or lifetime case, it is possible that you may identify other chargeable events in the course of your current enquiry. You should record any yield you get on your current enquiry. But, if an account for the future event is submitted on time and we do not carry out any further investigation work that will give rise to yield, there will be no further claim to yield.