In any case where IHT is payable the personal representatives or executors need to do battle with form IHT400, in order to apply for probate. This is not an easy task, even for tax professionals.
The IHT400 is a basic 16 pages, plus up to 19 further schedules, depending on the nature of the assets held by the deceased. The form also requires a calculation of the IHT due, and a declaration to be made by the executors or estate administrator.
HMRC can of course ask questions about the information presented on the IHT400, and it has recently set out the timetable in which it will do this, in the Trusts and Estates Newsletter, April 2018 edition. From now on executors will be told within two weeks if HMRC is going to examine the IHT400 more closely, and it will provide a deadline of up to 12 weeks in which it may open the enquiry (aka ‘compliance check’).
If the executors have not received an IHT related enquiry from HMRC within 14 weeks of submitting the IHT400, they can assume that all is well and the estate can be distributed. Where there is an enquiry into the IHT400, HMRC can take up to 8 weeks to establish its areas of concern. Resolving those issues, which will typically centre around valuations, may take much longer.
The new procedure means that HMRC will no longer issue clearance letters to the executors when it has completed its checks. The passing of time with no further questions is supposed to indicate that the matter is closed. Some executors will want to apply for a clearance on form IHT30, to give them the confidence to pay out the final amounts to beneficiaries of the estate.
Written by the Tax Advice Network