Grieving families are facing a surge in investigations from HM Revenue & Customs amid a major clampdown on underpaid inheritance tax.<\/p>\n
The number of probes launched by the taxman has soared by more than a third in just a year, fuelling concern that more estates are being dragged into disputes over the hated 40% duty.<\/p>\n
Figures obtained under a Freedom of Information request by accountants Price Bailey reveal HMRC<\/a> opened 4,171 formal investigations into inheritance tax (IHT) returns in the year to April – up from 3,028 the year before.<\/p>\n It comes as the Government steps up its war on tax avoidance to plug holes in the nation\u2019s finances, with HMRC<\/a> accused of taking an increasingly aggressive stance.<\/p>\n Once someone dies, their executor must submit a valuation of the estate – covering everything from property and savings to antiques, jewellery and even furniture.<\/p>\n If the estate is liable for IHT, a return must be submitted within 12 months. But the tax bill must be settled within six months or families face punishing interest charges currently running at 8.25 per cent.<\/p>\n If HMRC<\/a> suspects the estate has been undervalued – whether through error or deliberate omission – it has sweeping powers to investigate. These include demanding access to bank statements, investments and even foreign currency transactions.<\/p>\n Nikita Cooper of Price Bailey said: \u201cHMRC<\/a> is coming under increasing pressure to clamp down on non-compliance and boost the tax take as the government seeks to balance fiscal responsibility with economic growth.\u201d<\/p>\n Lawyers say the rise in investigations is being driven by growing access to data and the looming spectre of artificial intelligence.<\/p>\n Damian Bloom, of the law firm Taylor Wessing, told the Times<\/a>: \u201cI think the biggest driver is the increased availability of data for HMRC<\/a> and this will be accelerated with increased adoption of artificial intelligence.\u201d<\/p>\n