IHT investigations rose by 183 in 2018/19

In 2018/19, HMRC launched 5,537 investigations into IHT returns, against 5,354 in 2017/18. The 3.4% increase is smaller than last year, but then HMRC puts the number of IHT liable estates at ‘about 22,000’ in 2018/19, 2,500 fewer than in the previous year. The decline is almost certainly due to the impact of the residence nil rate band, (RNRB). Many of the returns received in 2017/18 would have related to deaths before 6 April 2017, which would have been before the RNRB came into being.
The simple maths suggests that HMRC are investigating 25% of the tax returns of estates that pay tax. However, that is an illusion. As the Office of Tax Simplification (OTS) indicated in its recent report, only about 9% of estate returns result in an IHT liability, suggesting investigations cover only about 2.5% of all returns.
Unfortunately, that proportion is also misleading, as HMRC are going to concentrate their efforts on larger estates where they can get more tax bang for their investigative buck.

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