While you should investigate and reach agreement in principle
if negligence has arisen (establish culpability (
IHTM36225)) and a penalty will be
sought, you should defer seeking to settle the actual amount of the
penalty until all your enquiries into the estate are concluded.
This is because as shown in the calculation of the culpable tax (
IHTM36176) the maximum tax geared
element of the penalty can be affected by other changes to the
taxable value of the estate. The difference under IHTA84/S247 (2),
which is used to calculate the maximum tax geared element, is
between the amount of tax that was payable on the account as
originally submitted and the amount found to be payable as shown in
the final tax calculation at the end of the enquiry. You will also
need to review the position in the event that further omissions or
undervaluations come to light.
You should nevertheless give the taxpayer an indication of
the likely amount of penalty that will be sought, based upon
current values and information, but you should make it clear that
you will notify the final amount to be sought once the case is
settled and the final tax payable figure has been notified. You
should seek your manager’s prior approval (
IHTM36223) before notifying the
taxpayer of any provisional or final penalty figures.
