HMRC Trusts And Estates Newsletter: Special Edition April 2018


HMRC has published a special edition April 2018 of its Trusts and Estates Newsletter which focuses on improvements to HMRC’s inheritance tax process and timescales for completion of Form IHT400 – Inheritance Tax Account.

On having received feedback, it would appear that many people would like to know earlier in the process whether or not HMRC may carry out a compliance check or ask questions about the values in the estate. This newsletter has been specifically produced to show the new timeline and outline the changes to the process for issuing clearance on an estate.

In certain straightforward cases HMRC will not look at the IHT400 form in any more detail after it has sent you its initial calculations – notification will be given in writing if this is the case of if the account will be looked at in more detail. In the latter case HMRC will provide detail of when you can expect to hear from them – usually 12 weeks from when the first calculations were submitted.

HMRC will no longer issue a clearance letter once the checks have been finalised. Instead, should you wish to apply for clearance, you should use form IHT30 ‘Application for a clearance certificate.’ You should, however, only do this once you are sure that there will be no further changes that will affect the tax position on the estate. Under section 239(2) of the Inheritance Tax Act 1994 it suggests that it is appropriate to wait two years after the date of death – although in practice HMRC will consider clearance earlier but would expect you to apply after at least a year has passed since date of death.

Even after probate has been granted, in many cases, there will still be changes which need to be notified to HMRC. In these cases, it would be better to wait until you believe the values in the estate are final or once 18 months have passed since the date of death, whichever is earlier. Before this, you only need to notify HMRC if:

• the changes relate to the value of land, buildings or unlisted shares;
• you want to claim relief when you have sold land or shares at a loss;
• you have sold assets on which you were paying tax by instalments;
• the total increase or decrease in the value of the estate is more than £50,000, before any exemptions or reliefs;
• we have told you that we are carrying out a compliance check on the estate;
• the person who died made a gift with reservation of benefit or had the right to benefit from a trust when they died.

You should also ensure that you use the right forms when you tell HMRC about changes. Use:

• form IHT35 ‘claim for relief – loss on sale of shares’ – to claim relief on shares sold at a loss within 12 months of the date of death;
• form IHT38 ‘claim for relief – loss on sale of land’ – to claim relief on land or buildings sold at a loss within four years of the date of death;
• form C4 ‘Corrective Account’ or send a copy of Form C4(S) ‘Corrective inventory and account (Scotland)’ – to tell us about any other amendments to the estate.

The Newsletter also provides a week by week timeline in relation to when you can expect to hear about your IHT400 form.

Finally, it is important to note that the IHT400 from is required to be submitted and any inheritance tax paid before probate can be granted so it is essential that HMRC receives all the information it needs to calculate the tax due.



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