HMRC sets the record straight on IHT400 compliance check deadlines

HMRC sets the record straight on IHT400 compliance check deadlines

Following mounting concerns that HM Revenue & Customs (HMRC) takes too long processing IHT400 estate returns, the tax authority has confirmed that going forward, returns will not require a compliance or valuation check if administrators have not been informed otherwise within 12 weeks of receiving IHT421 calculations.

In a special edition of HMRC’s trusts and estates newsletter published on 16 April 2018, the Revenue committed to a series of firm deadlines for IHT400 compliance checks.

Up until now, estate administrators who had submitted an IHT400 to HMRC would receive an IHT421 probate summary calculation within ten working days. At this stage, the tax authority would either clear the IHT400 immediately, or carry out a ‘target risk assessment’ within 16 weeks of initially receiving the IHT400 (dependent on the complexity and value of the estate).

HMRC would then check and value any assets in the estate at the same time and notify administrators with regards to any additional Inheritance Tax (IHT) liability within 20 weeks or less.

However, under the new changes, HMRC has committed itself to some much tighter deadlines in a move which it is hoped will help streamline the process as a whole.

Going forward, the Revenue will still issue an IHT421 within 10 days. However, if the estate return is not cleared immediately, HMRC will need to confirm its intention to carry out a full compliance check and provide the administrator with a specific date by which it expects to submit its queries – which must be within 12 weeks or less of the issue date of the IHT421.

In its newsletter, HMRC said: “If you have not heard from us by this date you can assume that we have no questions to ask about the information or values you have given in the form IHT400.

“The estate administrator can then proceed with the distribution of the assets, if all else is ready.”

Other changes to the process have also been confirmed. For example, HMRC will no longer automatically send out standard clearance letters unless the estate administrator requests one using form IHT30.

The Revenue has also issued a reminder to administrators that not all changes to an estate’s position need to be reported to HMRC as and when they happen.

While amended values of land, unlisted shares or a change in total estate value of £50,000 or more need to be reported immediately, administrators should refrain from reporting ‘small’ changes to the estate’s position until the process has completed and 18 months or more have passed since the date of death, it has said.