The Most Hated Tax of All: Part 2
People often say:
“I can’t understand why the solicitor is taking so long to deal with Grandma’s Will”
There is another side to this
No matter how good you or your solicitor or accountant are at doing the forms, the Inheritance Tax process is frustrating. Your competence doesn’t matter a row of beans if the Tax Office drag their heels. You can be subject to an all too familiar round of delays caused by human error, computer failure or staff shortages.
HMRC currently “believe” that the time line should be along the following lines.
Weeks 1 and 2 – IHT Claim Kick Off
Once an IHT400 inheritance tax account has been received by HMRC, the inheritance tax probate summary (IHT421) will be issued within 10 working days. This will allow personal representatives to apply for the grant of representation, preventing additional delays in this procedure.
HMRC cannot do this until all inheritance tax on non-instalment property and any tax on instalment property that is due when the return is submitted is paid.
We say that if payment of Inheritance Tax is made more than six months following the month end of death, HMRC will charge interest but in many cases, making payment this soon simply isn’t practical.
Weeks 3 and 4 – With HRMC
After payment HMRC will complete a number of administrative tasks in preparation for the initial review of the return by the risk team.
Weeks 5 to 11 – The Inheritance Estate Review
During these weeks the return will be reviewed. The complexity of the estate can impact the length of time that it takes for the return to be reviewed.
Weeks 12 to 20 – Compliance, or Not?
HMRC will now aim to inform the personal representative or his adviser whether the inheritance tax account has been selected for a compliance check. They will name the office carrying out the checks, and possibly the name of the compliance caseworker to contact with questions.
We say the quality of the caseworker will have a big impact on how smoothly things go from that point on.
The caseworker is expected to make contact with the personal representative within 8 weeks of the initial letter.
HMRC will confirm the accuracy of any property or other valuations that have been provided in the return and may also involve other agencies like the Valuation Office Agency or Shares and Assets Valuation or the Actuary.
A letter together with a calculation of any additional inheritance tax due will be sent within 20 weeks of receipt of the tax return once the valuations have been agreed with the VOA or SAV. If the valuations cannot be agreed the issue of this letter may take longer.
In all other circumstances the case will be sent to the service case working teams who will aim to finalise the tax position and prepare the case for closure within 20 weeks of the receipt of the return.
We ask, “will this happen?” This is anyone’s guess and we have encountered, as with all things HMRC, a mixed bag. Provided the Executors or their representatives respond efficiently, it may be possible to achieve. But this presupposes that everything down at HMRC goes just as planned, and the caseworker is efficient.
If things aren’t going according to plan, don’t assume the problem is with your solicitor or accountant. It could well be down to the tax man.
