G6: IHT Determinations
Power to make determine tax due
"(1) Where it appears to the Board that a transfer of value has been made or where a claim under this Act is made to the Board in connection with a transfer of value, the Board may give notice in writing to any person who appears to the Board to be the transferor or the claimant or to be liable for any of the tax chargeable on the value transferred, stating that they have determined the matters specified in the notice." (IHTA 1984, s.221)
"(2) The matters that may be specified in a notice under this section in relation to any transfer of value are all or any of the following—
(a) the date of the transfer;
(b) the value transferred and the value of any property to which the value transferred is wholly or partly attributable;
(c) the transferor;
(d) the tax chargeable (if any) and the persons who are liable for the whole or part of it;
(e) the amount of any payment made in excess of the tax for which a person is liable and the date from which and the rate at which tax or any repayment of tax overpaid carries interest; and
(f) any other matter that appears to the Board to be relevant for the purposes of this Act." (IHTA 1984, s.221)
Transfers of value include those arising from conditionally exempt transfers and trees/underwood
"(6) References in this section to transfers of value or to the values transferred by them shall be construed as including references to—
(a) chargeable events by reference to which tax is chargeable under section 32 or 32A of this Act,
(b) occasions on which tax is chargeable under Chapter III of Part III of this Act,
(c) disposals on which tax is chargeable under section 126 of this Act,
or to the amounts on which tax is then chargeable." (IHTA 1984, s.221)
Determination to be based on return if correct, otherwise to best judgment
"(3) A determination for the purposes of a notice under this section of any fact relating to a transfer of value—
(a) shall, if that fact has been stated in an account or return under this Part of this Act and the Board are satisfied that the account or return is correct, be made by the Board in accordance with that account or return, but
(b) may, in any other case, be made by the Board to the best of their judgment." (IHTA 1984, s.221)
Determination to state appeal rights
"(4) A notice under this section shall state the time within which and the manner in which an appeal against any determination in it may be made." (IHTA 1984, s.221)
Determination final, subject to appeal
"(5) Subject to any variation by agreement in writing or on appeal, a determination in a notice under this section shall be conclusive for the purposes of this Act against the person on whom the notice is served; and if the notice is served on the transferor and specifies a determination of the value transferred by the transfer of value or previous transfers of value, the determination, so far as relevant to the tax chargeable in respect of later transfers of value (whether or not made by the transferor) shall be conclusive also against any other person, subject however to any adjustment under section 240 or 241 below." (IHTA 1984, s.221)
Time limits for collecting IHT
IHT time limits apply to commencing proceedings to recover the tax, not to the issuing of a determination, but a determination must be issued prior to proceedings being commenced and proceedings cannot be commenced pending the initial appeal.
"(1) Where too little tax has been paid in respect of a chargeable transfer the tax underpaid shall be payable with interest under section 233 above, whether or not the amount that has been paid was that stated as payable in a notice under section 221 above; but subject to section 239 above and to the following provisions of this section." (IHTA 1984, s.240(1))
"(1) The Board shall not take any legal proceedings for the recovery of any amount of tax or of interest on tax which is due from any person unless the amount has been agreed in writing between that person and the Board or has been determined and specified in a notice under section 221 above.
(2) Where an amount has been so determined and specified but an appeal to which this subsection applies is pending against the determination the Board shall not take any legal proceedings to recover the amount determined except such part of it as may be agreed in writing or determined and specified in a further notice under section 221 above to be a part not in dispute.
(3) Subsection (2) above applies to any appeal under section 222 above but not to any further appeal; and section 222 above shall have effect, in relation to a determination made in pursuance of subsection (2) above, as if subsections (4) to (4B) of that section were omitted." (IHTA 1984, s.242(1))
- Account delivered and not careless: 4 years
"(2) Where tax attributable to the value of any property is paid in accordance with an account duly delivered to the Board under this Part of this Act and the payment is made and accepted in full satisfaction of the tax so attributable, no proceedings shall be brought for the recovery of any additional tax so attributable after the end of the period of four years beginning with the later of—
(a) the date on which the payment (or in the case of tax paid by instalments the last payment) was made and accepted, and
(b) the date on which the tax or the last instalment became due;
and at the end of that period any liability for the additional tax and any Inland Revenue charge for that tax shall be extinguished.
(3) Subsection (2) has effect subject to subsections (4) to (5A) and to section 240B (underpayments involving offshore matter etc)" (IHTA 1984, s.240(2) - (3))
- Account delivered but careless: 6 years
"(4) Proceedings in a case involving a loss of tax brought about carelessly by a person liable for the tax (or a person acting on behalf of such a person) may be brought at any time not more than 6 years after the later of the dates in subsection (2)(a) and (b)." (IHTA 1984, s.240(4))
Meaning of careless
"(2) A loss of tax is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about that loss." (IHTA 1984, s.240A(2))
Failure to disclose error treated as careless
(a) information is provided to Her Majesty's Revenue and Customs,
(b) the person who provided the information, or the person on whose behalf the information was provided, discovers some time later that the information was inaccurate, and
(c) that person fails to take reasonable steps to inform Her Majesty's Revenue and Customs,
any loss of tax brought about by the inaccuracy is to be treated as having been brought about carelessly by that person." (IHTA 1984, s.240A(3))
- Account delivered but deliberate: 20 years
"(5) Proceedings in a case involving a loss of tax brought about deliberately by a person liable for the tax (or a person acting on behalf of such a person) may be brought at any time not more than 20 years after the later of the dates in subsection (2)(a) and (b)." (IHTA 1984, s.240(5))
Deliberate includes deliberate inaccuracy in document
"(4) References to a loss of tax brought about deliberately by a person include a loss of tax brought about as a result of a deliberate inaccuracy in a document given to Her Majesty's Revenue and Customs by or on behalf of that person." (IHTA 1984, s.240A(4))
- Account delivered but failure to comply with tax avoidance scheme obligation: 20 years
"(5A) Proceedings in a case involving a loss of tax attributable to arrangements which were expected to give rise to a tax advantage in respect of which a person liable for the tax was under an obligation to make a report under section 253 of the Finance Act 2014 (duty to notify Commissioners of promoter reference number) but failed to do so, may be brought at any time not more than 20 years after the later of the dates in subsection (2)(a) and (b)." (IHTA 1984, s.240(5))
- Person acting on behalf includes settlor
"(8) In relation to cases of tax chargeable under Chapter 3 of Part 3 of this Act (apart from section 79), the references in subsections (4)[ to (6)]2 to a person liable for the tax are to be treated as including references to a person who is the settlor in relation to the settlement." (IHTA 1984, s.240(8))
- Account delivered but underpayment involves offshore matter: 12 years
"(1) This section applies in a case within section 240(2) which involves a loss of tax in relation to a chargeable transfer, where—
(a) the lost tax involves an offshore matter, or
(b) the lost tax involves an offshore transfer which makes the lost tax significantly harder to identify.
(2) Proceedings for the recovery of the lost tax may be brought at any time not more than 12 years after the later of the dates in section 240(2)(a) and (b).
(3) Lost tax “involves an offshore matter” if it is charged on or by reference to property which is situated or held in a territory outside the United Kingdom at, or immediately after, the time of the chargeable transfer.
(4) Lost tax “involves an offshore transfer” if—
(a) it does not involve an offshore matter, and
(b) the property is transferred to a territory outside the United Kingdom at a relevant time.
(5) In subsection (4)(b) “relevant time” means a time after the chargeable transfer but before—
(a) the date on which an account under section 216 is delivered to HMRC in relation to the chargeable transfer, or
(b) any later date on which an account under section 217 is so delivered.
(6) Where lost tax involves an offshore transfer, the cases in which the transfer makes the lost tax significantly harder to identify include any case where, because of the transfer—
(a) HMRC was significantly less likely to become aware of the lost tax, or
(b) HMRC was likely to become aware of the lost tax only at a significantly later time.
(7) But proceedings may not be brought under this section if—
(a) before the last date on which the proceedings could otherwise be brought, HMRC received relevant overseas information on the basis of which HMRC could reasonably have been expected to become aware of the lost tax, and
(b) it was reasonable to expect the proceedings to be brought before that date.
(8) In subsection (7)(a) “relevant overseas information” means information which is provided to HMRC by an authority in a territory outside the United Kingdom under—
(a) any provision of EU law relating to any tax, or
(b) an agreement to which the United Kingdom and that territory are parties, with or without other parties.
(9) This section is subject to any provision of this Act which allows for a longer period for the bringing of proceedings." (IHTA 1984, s.240B)
- Other cases (including no account delivered): 20 years
"(6) Subsection (7) applies to any case not falling within subsection (2) where too little tax has been paid in respect of a chargeable transfer, provided that the case does not involve a loss of tax brought about deliberately by a person liable for the tax (or a person acting on behalf of such a person).
(7) Where this subsection applies—
(a) no proceedings are to be brought for the recovery of the tax after the end of the period of 20 years beginning with the date on which the chargeable transfer was made, and
(b) at the end of that period any liability for the tax and any Inland Revenue charge for that tax is extinguished." (IHTA 1984, s.240(6) - (7))
IHT paid in accordance with prevailing view of the law: no further tax can be demanded
"Where any payment has been made and accepted in satisfaction of any liability for tax and on a view of the law then generally received or adopted in practice, any question whether too little or too much has been paid or what was the right amount of tax payable shall be determined on the same view, notwithstanding that it appears from a subsequent legal decision or otherwise that the view was or may have been wrong." (IHTA 1984, s.255)