Will we see an Inheritance tax deferral?
HMRC and the Government have recently announced measures to help tax payers in deferring VAT and income tax payments in the wake of Coronavirus.
We fully support such measures in these critical times, but what about Inheritance tax (IHT)?
There is currently a six month timeframe from death to pay IHT, and in normal circumstances that’s reasonable. However, now self isolation measures can impact on the ability to obtain the information necessary to account for IHT.
A current estate I am dealing with involves a property company with a large portfolio. How can the underlying property assets be accurately valued without inspections? How much longer will that process take because of COVID-19 protection measures? Or will executors and valuers have to take unnecessary risks leaving their home to meet that deadline?
In those circumstances, executors will be encouraged to submit estimates, but estates will then suffer interest on any underpayment that is subsequently established. HMRC has reduced the interest rate payable from 30 March 2020, but is that enough?
Is there an argument for further leniency in these unprecedented times? To recognise that executors may be self isolating, homeschooling or keyworkers, putting the needs of their children and society ahead of their legal obligations. Or sole practitioners who are now unable to progress estates because of illness.
Each case will be different and with good legal advice and support most will meet their obligations but for those who can’t, perhaps HMRC should offer a route to defer payment or appeal interest charges on IHT in exceptional circumstances such as these.
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