House of Commons - Public Accounts

Select Committee on Public Accounts Twenty-Ninth Report

2 Making the tax procedures easier for representatives

12. Representatives of estates fall into two main groups: professionals appointed by the deceased such as a solicitor or accountant; and personal representatives, often a relative of the deceased. The latter group usually have little experience of dealing with Inheritance Tax matters, and some engage solicitors or other professionals to prepare the tax return and administer the estate, the costs of which are met from the estate. Around 30% of Inheritance Tax returns are submitted by personal representatives. It is therefore important that the Revenue makes it as easy as possible for representatives to deal with the tax and meet their obligations.[18]

The ease-of-use of the tax returns

13. All government departments should minimise the burden which their forms impose on citizens.[19] In recent years, the Revenue has made efforts to improve and simplify the Inheritance Tax forms, for example by rationalising the main tax return and introducing a shorter, easier to complete, form for the majority of estates. The main Inheritance Tax form, which will continue to be used in over 37,000 cases a year, remains difficult to complete and the Revenue could simplify the technical and complex language, and change the layout to make it more relevant to users. In recent reviews of its forms the Revenue has consulted solicitors and other professionals, but not non-professionals who are more likely to experience difficulty in completing them.[20]

14. The Revenue is considering whether to introduce an electronic filing service for Inheritance Tax returns. This would make it easier for the Revenue to check returns and to assess the compliance risks, and make the submission of forms easier for some representatives. The benefits are less clear, however, for those who need to use the main form, and often have to submit supporting documents such as a copy of the Will.[21]

Guidance for representatives

15. The Revenue provides guidance notes and information on its website to assist representatives in completing the tax return. It has also launched a joint probate/Inheritance Tax telephone helpline which has been well-received. In response to the C&AG's Report, the Revenue has made it easier to access information on Inheritance Tax on its own website and it is working with other government departments to improve the information available on their websites.It is also considering, with other departments, launching a 'bereavement journey' website that provides a full range of information and advice for people when dealing with the death of a relative.[22]

16. Recent feedback to the Revenue showed that only 36% found its guidance notes easy to understand. Some representatives were uncertain about how to value property for Inheritance Tax purposes, paying for professional valuations when a broader estimate may suffice. The Revenue is looking at whether it could do more to highlight the availability of some websites, such as the Land Registry's online database, that representatives might consult. There is also uncertainty about how properties funded by Islamic mortgages should be valued for Inheritance Tax purposes. Use of these mortgages is expected to grow in future, but at present the Revenue deals with relatively few cases on an individual basis, rather than by issuing general advice.[23]

Payment terms

17. The Probate Service does not grant probate until Inheritance Tax due is paid. This is an important safeguard in ensuring tax returns are submitted, but representatives have often needed a loan to pay the tax, with the interest costs met from the estate after probate. To alleviate this, the Revenue allows payment by instalment of the tax due on property and some other assets. Since 2003 representatives have also been able to use funds held in an estate's bank accounts to pay the tax due before obtaining probate. Some estates may nevertheless have insufficient liquid assets for representatives to pay the tax in advance of probate, if for example the main asset is the family home. The Revenue considers that estates usually do have enough liquidity to pay the tax due, but it has not analysed those potentially affected.[24]

18 C&AG's Report, para 3.1; Q 13 Back

19 26^th Report from the Committee of Public Accounts, Difficult forms: how government departments interact with citizens (HC 255, Session 2003-04), Recommendation 1 Back



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