SVM108150 - Inheritance Tax: Teamworking Arrangements with the IHT Caseworker – all Valuation Requests

The IHT caseworker divides his work in relation to death estates and other taxable occasions into the following:

Full enquiries – see Chapter 29 of the Inheritance Tax Manual IHTM29022

"Other" enquiries – see chapter 29 of the Inheritance Tax Manual IHTM29023

Some of the points below relate equally to all references from the IHT caseworker but other aspects of the liaison process will vary in accordance with whether the valuation request relates to a full enquiry or not.

All Valuation Requests

You should notify the IHT caseworker at the earliest possible opportunity of the following: -

• If it is agreed or there is a strong possibility that BR is not due as claimed;
• If we accept that 100% BR is due when it was not originally claimed;
• If a meaningful adjustment in value is likely to be achievable;
• If you discover that a previously undisclosed sum was due to an estate from the company or that a sum due is substantially greater than that shown on the Val 70. [You should bear in mind that sums due by way of loan account, undrawn dividends etc. do not qualify for business relief and are fully taxable. You should also inform the IHT caseworker of any possible omissions, for example, where a balance sheet shows sums due to directors but no breakdown is given. See this chapter at SVM108080]
• If there is a change in relation to the instalment option being exercised by the taxpayers.

For example, you note from the Val 70 that the tax is being paid by instalments and interest relief has been claimed. If the company is an investment company, interest relief is not available and you should notify the IHT caseworker accordingly. Alternatively, tax on a deceased's shares may be being paid by instalments and you are informed or discover that the company has been sold or the shares have been sold. The instalment option ceases on sale and you should notify the IHT caseworker. [See also this chapter at SVM108100.]

• If you become aware of events which could affect the amount of IHTpayable.

For example, where SAV has been asked to value for CGT purposes transfers to relatives/trusts within 7 years of a deceased's death but we have only been asked to consider the value/ BR position at the date of death for IHT and not in relation to the lifetime transfers. Full details should be given to the IHT caseworker to consider any additional valuation requirements. [See also this chapter at SVM108190.]

Where you are reporting omissions or adjustments, you should inform the IHT caseworker how the adjustment/understatement came to light, as he/she will wish to consider whether penalties might be appropriate.