HMRC Tries to Fine Executor for a Negligent Property Valuation although the Executor Declared an Increase in Value

December 18, 2013 4:12 pm

In 2007 Mr Lever, acting as executor for his late mother-in-law’s estate, paid £400,000 in inheritance tax, closed the accounts, and distributed the balance of the estate to beneficiaries of her will. Four months later he received a letter from HMRC saying they were re-considering the value on his late mother-in-law’s home – the house had orginally been valued by a local estate agent at £1.4 million (this was declared in the IHT200 form and submitted to HMRC) but it eventually went on to sell through a non-binding sealed-bid auction for over £2 million.

Although Mr Lever paid the full value of inheritance tax on the £2 million sold value of the property and not on the original estate agent’s lower estimate HMRC said they were considering enforcing a personal penalty for negligence on Mr Lever for the sum of £44,000 because of the information he submitted in his original IHT200 form. He refused to pay the penalty, arguing that he had not been negligent but had informed them promptly when the house sold for more than its estimated value and paid all inheritance tax in full.