HM Revenue & Customs’ (HMRC) continuing crackdown on tax avoidance and evasion regularly hits the headlines.
It is not just focusing its attention on complex tax schemes involving celebrity clients but is spreading its net far and wide, including in relation to inheritance tax (IHT).
Following the death of her aunt in 2010, Theresa Bunn, of Kilgarvan, Co Kerry, told HMRC that the estate was worth around £285,000, well below the £325,000 threshold for paying IHT.
But an HMRC investigation later revealed the estate was worth more than £1.5 million and on 10 March this year, Ms Bunn was jailed for two years and eight months at Chichester Crown Court after she admitted a charge of cheating the public revenue. The real value of her aunt’s estate meant she had avoided an inheritance tax bill of around £500,000.
HMRC investigated her finances after officers discovered she had been financially supporting a friend and using her friend’s bank accounts to hide money and evidence of her spending. Ms Bunn also failed to declare substantial cash gifts from her aunt while she was alive.
While the case is an extreme one, it does highlight the importance of seeking professional advice to ensure any IHT planning steps taken are HMRC-compliant, of recording any gifts made during the taxpayer’s lifetime so that these can be included, if appropriate, in IHT calculations and that all inheritance tax submissions are correct.
Moore Thompson can provide expert advice to assist taxpayers who believe their estates may be liable to a future IHT liability, to maximise tax efficiency, and assist executors in dealing with inheritance tax returns and making payments. For more information on how we can help, please contact us.