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Inheritance Tax Dispute Solicitors

An HMRC challenge to an inheritance tax return — over the valuation of estate assets, the availability of business or agricultural relief, or the deductibility of liabilities — can add hundreds of thousands of pounds to the IHT bill. A solicitor will contest the challenge and recover the position.

Inheritance tax disputes arise from HMRC investigations into the IHT400 account — challenging the valuation of the deceased's estate assets, denying reliefs (Business Property Relief, Agricultural Property Relief, Spouse Exemption, Charity Exemption), or questioning the deductibility of debts and liabilities. The values at stake are frequently large — particularly where the estate includes business interests, agricultural land, or residential property subject to valuation dispute. A solicitor will present the estate's position, challenge HMRC's valuation or denial of relief, and pursue an appeal to the First-tier Tax Tribunal where HMRC's position is legally incorrect.

Business & agricultural property relief IHT asset valuation disputes HMRC investigation of IHT returns Free initial consultation

IHT Disputes — Key Issues

Inheritance tax disputes — the areas where HMRC most commonly challenges IHT returns and the reliefs most frequently contested.

IHT disputes typically involve HMRC challenging either the valuation of estate assets (to increase the taxable value of the estate) or the availability of reliefs that reduce the IHT liability. A solicitor will identify which challenges have legal merit and pursue the correct position.

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Business Property Relief — HMRC challenging the trading status

Business Property Relief (BPR) provides 100% IHT relief for shares in qualifying unquoted trading companies and partnerships, and 50% relief for assets used in the business. BPR is one of the most valuable IHT reliefs available — and one of the most frequently challenged by HMRC. HMRC denies BPR where it considers the company or partnership is not wholly or mainly carrying on a qualifying trade — i.e., that it is an investment business (holding properties, investments, or cash) rather than a trading business. The boundary between trading and investment activity is frequently litigated — a solicitor will assess the business's activities, present the evidence that the qualifying conditions are met, and challenge HMRC's denial of BPR at appeal.

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Agricultural Property Relief — eligibility and land use disputes

Agricultural Property Relief (APR) provides 100% IHT relief for agricultural property occupied for the purposes of agriculture — farms, farmhouses, and agricultural land. HMRC challenges APR claims where: the farmhouse is considered too large for the farming operation (the character test); the land has not been used for agricultural purposes in the qualifying period (2 years of owner-occupation or 7 years of tenanted occupation); or the agricultural nature of the property is disputed. A solicitor will assess the qualifying conditions, present the evidence of agricultural use and character, commission an expert agricultural report where required, and challenge HMRC's denial of APR at the First-tier Tribunal.

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IHT asset valuation disputes — residential property and business interests

IHT is assessed on the "open market value" of the estate's assets — the price that a willing buyer would pay to a willing seller in the open market at the date of death. HMRC's Shares and Assets Valuation unit values unquoted shares and business interests; the Valuation Office Agency values land and property. Where the estate's valuation and HMRC's valuation differ significantly, the dispute is resolved by negotiation or — where agreement is not reached — appeal to the First-tier Tribunal (Tax). A solicitor will commission an independent valuation, challenge HMRC's valuation methodology, and negotiate a settlement or pursue the appeal to achieve the most favourable valuation for the estate.

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Deductibility of liabilities — HMRC challenging estate debts

IHT is calculated on the net value of the estate — the value of assets after deducting liabilities. HMRC may challenge the deductibility of specific debts where: the liability was not a genuine arm's length obligation (a family loan with no commercial substance); the liability was created to reduce the IHT liability (an artificial debt); or the liability was not outstanding at the date of death. Anti-avoidance provisions in FA 1986 restrict the deduction of liabilities where they finance excluded property or non-deductible assets. A solicitor will present the evidence of the liability — the loan agreement, the circumstances in which it arose, and the evidence that it was a genuine commercial obligation — and challenge HMRC's disallowance.

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Failed lifetime gifts — HMRC recovering tax on potentially exempt transfers

Lifetime gifts (other than those that are immediately exempt) are "Potentially Exempt Transfers" (PETs) — they are exempt from IHT if the donor survives for 7 years after the gift. If the donor dies within 7 years, the gift is brought back into the estate (for deaths within 3 years) or subject to taper relief (for deaths between 3 and 7 years). HMRC investigates lifetime gifts identified through the IHT400 account and challenges the valuation of gifts made by the deceased. A solicitor will advise on whether the value of lifetime gifts is correctly reported, challenge HMRC's alternative valuations, and assess whether the gifts were reported in the correct period and at the correct value.

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HMRC investigations into the IHT account — enquiries and penalties

HMRC can open an investigation into the IHT400 account within 4 years of the date it was submitted (or longer where fraud or negligent conduct is alleged). An HMRC investigation into an IHT return is managed by HMRC's Trusts, Wills, and Estates unit — which has specialist expertise in complex estate structures, offshore assets, and trust arrangements. Where the investigation reveals an inaccuracy in the return, penalties apply — ranging from 30% (careless behaviour, prompted disclosure) to 100% (deliberate and concealed, no disclosure) of the additional tax. A solicitor will advise on the investigation, challenge the basis of any additional assessment, and negotiate the minimum penalty by demonstrating the quality of the disclosure and the absence of deliberate behaviour.

How It Works

An HMRC IHT challenge contested by a solicitor produces a better outcome than one accepted without question — the difference is often significant, both in the tax saved and the penalty avoided.

A solicitor will assess the strength of HMRC's challenge, present the evidence that supports the estate's position, negotiate with HMRC on valuation and reliefs, and appeal to the First-tier Tribunal where the challenge cannot be resolved by agreement.

Submit Your Request
1

Tell us about the IHT dispute

Describe the nature of HMRC's challenge — the assets disputed, the relief denied, or the valuation disagreed — and the amount of additional IHT HMRC is seeking.

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Solicitor assesses the challenge and advises on prospects

An IHT specialist reviews HMRC's position, assesses the strength of the estate's case, and advises on the most effective route to resolution — negotiation, internal review, or First-tier Tribunal appeal.

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Free initial consultation

You receive clear advice on the IHT dispute and whether HMRC's challenge can be successfully contested — at no cost and no obligation.

Free Initial Consultation

An HMRC challenge to an IHT return that goes uncontested results in the estate paying more tax than is legally due. A solicitor will identify whether the challenge can be reduced or defeated — and pursue the appeal if it can.

Get specialist inheritance tax dispute advice — and find out whether HMRC's challenge to the estate's return can be successfully contested.

Contest This IHT Challenge

Common Questions

Inheritance tax disputes — what people ask us.

HMRC has denied Business Property Relief on our family company shares. How do we challenge this?

The first step is to understand the basis of HMRC's denial — whether it is challenging the trading status of the company (investment vs trading), the two-year minimum ownership period, or whether the shares are excluded property. A solicitor will review the denial, assess the company's activities in detail (the nature of the income, the assets held, and the management time devoted to trading vs investment), and prepare a detailed technical response demonstrating that the company meets the "wholly or mainly trading" test. If HMRC maintains its position following the response, the estate has the right to request an HMRC review and, thereafter, appeal to the First-tier Tax Tribunal — which will hear the evidence and make its own finding on the company's activities.

HMRC has valued the estate's property at a significantly higher figure than our valuation. What can we do?

HMRC's Valuation Office Agency (VOA) provides property valuations for IHT purposes — and frequently values properties higher than the estate's own independent valuation. Where the valuations differ, the dispute is negotiated between the estate's valuer and the VOA in the first instance. Where agreement is not reached, the dispute is referred to the Upper Tribunal (Lands Chamber) for determination. A solicitor will manage the valuation dispute — reviewing the VOA's comparables and methodology, commissioning a detailed rebuttal valuation, and negotiating with the VOA to achieve the most favourable valuation settlement possible. Only a small proportion of valuation disputes reach the tribunal — most are resolved by negotiation.

How long does HMRC have to investigate an IHT return?

HMRC can open an investigation into an IHT account within 4 years of the submission date where the inaccuracy was careless (for IHT accounts submitted on or after 1 April 2010). Where the inaccuracy was deliberate, the time limit is 20 years. For the period before April 2010, different time limits apply under the Finance Act 1986 and the Inheritance Tax Act 1984. In practice, HMRC investigates most complex estates — including those with business interests, offshore assets, or significant lifetime gifts — within 6–18 months of the account being submitted. A solicitor will manage the investigation process and challenge any assessment raised outside the applicable time limit.

The deceased gave away assets in the 7 years before death. How does this affect IHT?

Lifetime gifts between individuals are Potentially Exempt Transfers (PETs) — they fall out of the estate for IHT purposes if the donor survives for 7 years after the gift. If the donor dies within 3 years of the gift, the full value of the gift is added back to the estate for IHT. For deaths between 3 and 7 years after the gift, taper relief reduces the IHT charge on the gift — by 20% for years 3–4, 40% for years 4–5, 60% for years 5–6, and 80% for years 6–7. Gifts to trusts are Chargeable Lifetime Transfers (CLTs) — taxed immediately at 20% above the nil-rate band and again on death if the donor dies within 7 years. A solicitor will advise on the IHT treatment of all lifetime gifts and challenge any HMRC assessment on their value.

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