Spring 2005 Newsletter Content Home Sweet Pension Anything To Declare? Death And Taxes His And Hers Oh, Gross! We Didn't Mean It Agassi Wins Time To Go It Could Be Worse... Trivial Pursuit Re: Mortgages A Marriage Made In... Time's Money Show Business Scam Of The Decade? Gift Aid Vat's Hot! Wait For It A Good Buy? Know Your Articles Rights And Wrongs

Anything To Declare? Inheritance tax is not very popular. It comes at a bad time, and seems unfair to many people - and house price rises have brought more and more people into its net. So it's not welcome news that the Inland Revenue say they will be looking more closely at some of the declarations they receive in future. The trouble is that you are supposed to make a long list of all the deceased person's belongings and put a value on them. The one person who could do this best is no longer with us - so it's a time-consuming and frustrating exercise, and at the end of it you may have to pay 40% of the figure you come up with to the Revenue. They, with their suspicious minds, think people yield to the temptation to leave things off the list, or to put in a low value - but, in many cases, it's probably just the difficulty of getting it right. So the Revenue have announced that they will be paying close attention to some areas in future. For example, if someone has a second home - say a holiday place abroad - the Revenue will expect there to be some contents. Perhaps they want to arrange a trip to check. They will want details of how the values have been arrived at, and if any independent qualified valuer has been used. They will be curious if goods are given no value or a very low value. The last thing you want when you are dealing with an estate is to have to cope with enquiries from the Inland Revenue as well. Often people ask their professional advisers to sort out probate and inheritance tax anyway, but if you want to do it yourself, we will be happy to give you advice when you need it. This warning comes in the Capital Taxes Office December IHT Newsletter, which can be viewed on the web at www.inlandrevenue.uk/cto/december_newsletter.pdf. The overall questions which the CTO will ask are: 1. Does the IHT account constitute a complete return of the household and personal goods owned by the deceased, transferor or trust? 2. Has the value of those goods been ascertained in accordance with the correct statutory principles i.e. "the price which the property might reasonably be expected to fetch if sold on the open market"? Areas which cause particular difficulties for IR Capital Taxes are: * Where it is unclear on what basis a valuation has been made. * Where the accountable person has made an estimated valuation themselves. * Where the goods are described as having no value. * Where the estate included a vehicle but insufficient details are given to confirm the value. * Where a valuer has provided a range of values and the accountable person has included values from the bottom of the range. * Where the goods are jointly owned and the questions on form D4, which is used for jointly owned goods, are not completely answered. * Where circumstances indicate there has been a sale at an undervalue or a forced sale. * Where the estate includes property situated abroad - for example a holiday home - and there is no mention of household and personal goods there. The Revenue say that from January 2005 they will be paying particularly close attention to the values included for household and personal goods. In all the above circumstances there is an increased likelihood of an enquiry.