Inheritance tax inquiry launched by HMRC

Those involved in wills and probate matters have been told that HMRC is currently investigating hundreds of inheritance tax valuations from last year.

This is according to accountancy firm UHY Hacker Young, which revealed that 9,368 investigations involving beneficiaries and estates had been carried out by HMRC in the year ending December 2010, the Guardian reported.

UHY Hacker Young said that HMRC had amassed an extra £70 million after it questioned the sum that properties were valued at in the estates of individuals who had died.

"Inheritance tax doesn't just affect millionaires, but most of middle England where the estate may consist of little more than an average-size property and a family member may take on the task of administering the estate themselves," Mark Giddens, partner at UHY, said.

HMRC can then fine estate beneficiaries if it discovers that the inheritance tax property valuation is incorrect as the valuation did not involve "reasonable care".

However, people will soon be able to reduce the amount of inheritance tax they pay if they gift a portion of their estate to charity when they make a will.

People who gift ten per cent of their assets to charitable causes in this document will have the amount of inheritance tax they pay reduced.

Published by Hannah Carr