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Inheritance Tax Disputes

Inheritance Tax Dispute Solicitors — BPR, APR, Estate Valuations, and HMRC Assessments

HMRC's Trusts and Estates compliance team scrutinises inheritance tax returns where significant reliefs are claimed or where the estate value appears inconsistent with HMRC's data. The most common IHT disputes involve challenges to business property relief (BPR — IHTA 1984 ss.103–114), agricultural property relief (APR — IHTA 1984 ss.115–124C), gifts with reservation of benefit, and estate valuations. A specialist IHT dispute solicitor advises executors, beneficiaries, and taxpayers facing HMRC IHT enquiries and assessments — protecting the estate's position and challenging incorrect determinations through statutory review and Tax Tribunal appeal.

Business Property Relief — IHTA 1984 s.105 Agricultural Property Relief — IHTA 1984 s.115 Gifts with reservation — FA 1986 s.102 HMRC estate investigations
⚠️ IHT assessments and HMRC challenges to BPR and APR have strict time limits for response. HMRC has 4 years from the date the IHT account was delivered to raise a determination in most cases (IHTA 1984 s.221). Where HMRC suspects fraud or deliberate suppression of estate assets, the limit extends to 20 years. An HMRC notice of determination must be appealed to the First-tier Tribunal within 30 days. Executors who do not challenge incorrect determinations within the deadline lose the right to appeal.

Inheritance Tax Disputes — Key Areas

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Business Property Relief — IHTA 1984 ss.103–114 — BPR provides 100% or 50% relief on relevant business property — unincorporated businesses and interests in partnerships (100%), shares in unquoted trading companies (100%), shares in quoted trading companies (50%), and business assets used in a business (50%). HMRC challenges BPR claims where: the business is not a qualifying business (wholly or mainly carrying on a trade — investment businesses do not qualify); the asset was not business property for at least 2 years before the transfer; or the business is "mainly" investment rather than trading (the "wholly or mainly" test — HMRC scrutinises the balance of activities, assets, and income). A solicitor analyses the business's activities and assets, prepares expert evidence of trading activity, and challenges HMRC's refusal.
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Agricultural Property Relief — IHTA 1984 ss.115–124C — APR provides 100% or 50% relief on the agricultural value of agricultural property — land, farmhouses (ancillary to the farming of the land — HMRC scrutinises occupation by a working farmer), and farm buildings. HMRC challenges APR where: the property is not agricultural property; the agricultural value is disputed (agricultural value vs market value — HMRC uses the Valuation Office Agency); the occupation test is not met (2 years for owner/occupiers; 7 years for landowner/landlord — IHTA 1984 s.117); or the farmhouse is considered too large relative to the farming operation. A solicitor challenges HMRC's valuation, the occupation analysis, and the character appropriate to farming test.
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Gifts with reservation of benefit — FA 1986 s.102 — where a donor makes a gift but continues to benefit from the gifted property (by living in the house given away, continuing to receive income from a business transferred, or otherwise enjoying the asset), the gift is treated as a gift with reservation of benefit (GROB). For IHT purposes, the asset is treated as if it still formed part of the donor's estate — so both the gift (a potentially exempt transfer subject to the 7-year rule) and the GROB value at death may be counted. HMRC challenges estates where it believes a GROB exists — often in relation to the family home or a business transferred to children. A solicitor challenges HMRC's GROB analysis and advises on the interaction with CGT on the original disposal.
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HMRC investigation into the estate — HMRC Trusts and Estates investigates IHT accounts (IHT400 and schedules) where: assets appear to have been omitted; the valuations appear low relative to market evidence; significant BPR or APR is claimed; or HMRC's data (Land Registry, Companies House, offshore CRS data) suggests undisclosed assets. HMRC opens a formal compliance check, which can result in an IHT determination. Executors are legally responsible for the accuracy of the IHT account and the payment of IHT — a solicitor advises on the executor's obligations during the investigation and manages HMRC's information requests.
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Estate valuation disputes — VOA and HMRC Shares Valuation — IHT is charged on the market value of the estate at the date of death (IHTA 1984 s.160). HMRC may dispute the value of: business interests and unquoted shares (HMRC Shares Valuation); land and buildings, including farmland and development land (Valuation Office Agency); and personal chattels. A solicitor challenges HMRC's valuation by commissioning an independent expert valuation, submitting it to HMRC, and — where agreement cannot be reached — referring the valuation dispute to the Tax Tribunal (or the Lands Chamber of the Upper Tribunal for complex property valuations).
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Associated operations — IHTA 1984 s.268 — HMRC may treat a series of related transactions as a single associated operation for IHT purposes — looking through the steps of a scheme and imposing IHT as if the overall effect had been achieved in a single transfer. This is most commonly used by HMRC to challenge IHT planning involving lifetime gifts, business reorganisations, and trust arrangements. A solicitor advises on whether HMRC's associated operations analysis is legally sustainable and challenges it through statutory review and Tax Tribunal appeal — where the transactions were genuinely independent and commercial.

Frequently Asked Questions

HMRC is challenging BPR on our family company — what are the main grounds of challenge?

HMRC challenges BPR on the "wholly or mainly" test — under IHTA 1984 s.105(3), a company does not qualify for BPR if its business consists "wholly or mainly" of dealing in securities, stocks or shares, land or buildings, or making or holding investments. HMRC analyses the business's activities, asset profile, and income to determine whether it is mainly trading or mainly investing. Common challenges: a holding company that holds passive investments alongside trading subsidiaries; a property business that HMRC classifies as investment rather than trading (serviced offices, furnished holiday lettings); and a business whose activities have changed in the 2 years before death. A solicitor analyses the business's activities in detail, obtains evidence of the trading activities, and challenges HMRC's classification.

Can HMRC challenge APR on farmland after probate has been granted?

Yes — HMRC has 4 years from the date the IHT account was delivered to raise a determination challenging an APR claim in most cases (IHTA 1984 s.221(2)). HMRC Trusts and Estates may open a compliance check at any time within this period. Common APR challenges after probate include: HMRC asserting that the farmhouse did not qualify as agricultural property (too large, not occupied by a working farmer or not ancillary to the farming of the land — Rosser v IRC [2003]); HMRC disputing the agricultural value of the land (arguing that development hope value exists and is not agricultural value); and HMRC questioning whether the occupation test was met. A solicitor challenges each ground and manages the valuation dispute through the VOA.

What is a gift with reservation of benefit and how does HMRC identify it?

A gift with reservation of benefit (GROB — FA 1986 s.102) occurs where a donor gives property away but continues to benefit from it: the classic example is a parent giving their home to their children but continuing to live in it rent-free (the "Ingram scheme" and its variants). HMRC identifies GROBs through: Land Registry data (home given away but donor still at the same address); estate agents and probate records (donor still in occupation at death); and bank records (donor still receiving income from a business nominally transferred). Where a GROB exists, the property is treated as remaining in the donor's estate for IHT — additional IHT is assessed plus interest. A solicitor challenges HMRC's GROB analysis and advises on whether a pre-owned assets tax (POAT) charge arises instead.

What are my obligations as executor during an HMRC IHT investigation?

An executor is responsible for delivering an accurate IHT account (IHT400) and for paying the IHT due. During a Trusts and Estates compliance check, HMRC may require the executor to provide supporting documentation for valuations, details of gifts made by the deceased in the 7 years before death, evidence of BPR or APR qualifying conditions, and bank statements. An executor who provides inaccurate information may be personally liable for a penalty under FA 2007 Sch 24. A solicitor advises executors on their obligations during the investigation, manages HMRC's information requests, and ensures that privileged material is not inadvertently disclosed.

What is the time limit for HMRC to raise an IHT assessment?

HMRC must issue a determination challenging an IHT account within 4 years of the date the IHT account was delivered (IHTA 1984 s.221(2)) in most cases. For deliberate non-compliance (where the taxpayer has fraudulently or negligently made an incorrect account), there is no time limit — HMRC can raise a determination at any time. For estates where no IHT account was filed (no IHT to pay was incorrectly assumed), HMRC can raise a determination within 20 years under TMA 1970 s.36(1A) (which applies to IHT by reference). A solicitor analyses whether HMRC's determination is within the applicable time limit and challenges it where the limitation period has expired.

How It Works

One clear request. An IHT solicitor challenges HMRC's assessment and protects the estate.

No upfront cost. A specialist IHT dispute solicitor advises executors and beneficiaries on HMRC's IHT compliance check, challenges refusals of BPR and APR, disputes HMRC's valuations with expert evidence, and manages the appeal to the First-tier Tribunal (Tax Chamber) where necessary.

Submit Your Request
1

Tell us about the IHT dispute

Describe the HMRC challenge — BPR, APR, GROB, or estate valuation — the estate value, and any HMRC determination deadline you face.

2

Matched to a specialist

We connect you with a specialist IHT dispute solicitor experienced in challenging HMRC Trusts and Estates assessments and refusals of IHT relief.

3

Estate protected

Your solicitor challenges HMRC's determination, obtains expert valuation evidence, and — where agreement cannot be reached — appeals to the First-tier Tribunal (Tax Chamber).

Inheritance Tax Disputes

HMRC's challenge to BPR, APR, or an estate valuation can cost the estate hundreds of thousands. A specialist solicitor fights it.

From BPR and APR challenges through to gift with reservation allegations, estate valuation disputes, associated operations analysis, and HMRC Trusts and Estates investigations — a specialist IHT dispute solicitor advises executors and beneficiaries, protects the estate from incorrect HMRC determinations, and achieves the best possible IHT outcome.

Submit Your Request

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