Increasing HMRC IHT Checks - Executors Must Know This!
- Feb 24
- 2 min read
HM Revenue & Customs (HMRC) is becoming far more proactive in investigating Inheritance Tax (IHT) returns. With rising property values, frozen thresholds, and advanced data‑matching technology, more estates than ever before are being reviewed.
Increasing HMRC IHT Checks - Executors Must Know This! so lets take a look at what they look at and the tools they use to investigate you. We will then close by considering how families can minimise risk through good preparation and compliance.
Why HMRC Is Increasing IHT Checks
It simply comes down to “Rising estate values”, more families are crossing the IHT threshold as property and other asset values grow, combined with:
Frozen tax allowances have not increased in years, pulling more & more estates into the IHT net.
Recovering unpaid tax of more than £246m in additional IHT last year alone, showing strong enforcement.
What Data HMRC Looks At
HMRC now uses sophisticated technology and cross‑checking tools to identify estates that may owe more tax than declared. Key sources include:
Land Registry data to compare reported property values with market evidence.
Bank and financial records including savings, investments, insurance policies, and foreign accounts.
Trust registrations and any connected assets.
Gift history, especially gifts made within seven years of death or gifts where the deceased continued to benefit (known as ‘gifts with reservation’).
Digital and financial footprints, using data‑matching to confirm accuracy and completeness.
What HMRC Focuses on During an Investigation
Now lets consider what HMRC could take a longer and harder look at to try and find additional potential tax.
Undervalued property or personal assets.
Missing or undeclared bank accounts, investments, or valuables.
Gifts that may still form part of the estate.
Trusts are correctly reported or omitted.
Pension arrangements that may fall into the estate under changing rules.
How HMRC Tries to Recover Additional Tax
Whoever is managing the estate (executors/solicitors) will come under more pressure:
To provide further information such as valuations, statements, and supporting documents.
They may challenge property valuations and request professional evidence.
Long look‑back longer periods examining historic gifts, trusts, and transactions going back up to 20 years.
If HMRC determines tax is owed, they will issue a revised calculation.
Interest would be charged on unpaid tax, and penalties can apply for inaccuracies or omissions.
How Families Can Reduce the Risk of Investigation
So what can you do to safeguard your estate and family’s inheritance.
Obtain professional valuations for property, businesses, and valuable items.
Keep clear records of any gifts made in the last seven years.
Ensure trust documentation is accurate and up to date.
Seek professional guidance to ensure the IHT return is complete and stands up to scrutiny.
In Conclusion
As HMRC increases its use of data‑matching and analytics, accurate and transparent estate reporting has never been more important. Good preparation, expert valuations, and professional advice can help protect families from unexpected tax bills and lengthy investigations.
Previous Related Articles
