Inheritance tax manual - Section 26 - Part 2 : References from IR(CT)

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Part 2 : References from HMRC(IHT)

26.7 General

Subject to 26.27 below, the VOA is authorised to act in respect of any reference from HMRC(IHT) for valuation or other advice in connection with IHT.

It should, however, be remembered that, although the case papers may be with the VOA, HMRC(IHT) retains overall ownership of the case. Therefore, it is imperative that HMRC(IHT) is kept advised of developments (especially if it appears likely that the case will become contentious) and all time limits set out in the following sections must be strictly adhered to.

26.8 Communications with HMRC(IHT)

All communications from HMRC(IHT) should contain the name of the deceased and the HMRC(IHT) reference. In addition communications will contain, either:

The Mailpoint email address (see below) of the section dealing with the case; and/or

The HMRC(IHT) caseworker's name and telephone number.

In order to enable them to identify a case, the DV should quote both the HMRC(IHT) reference and the name of the deceased when contacting HMRC(IHT) by any means.

Unless instructions provide for the dispatch of a hard copy form or it is necessary to enclose papers which cannot be sent as a Microsoft Word attachment, communication with HMRC(IHT) should normally be by telephone or email.

In order to ensure that email messages do not rest in redundant or vacant inboxes, HMRC(IHT) has set up Mailpoints to receive and distribute emails from the VOA. Emails should normally be sent to these Mailpoints in the first instance (their email address appearing in the Global Address List will commence "Mailpoint...(CTO))". If, exceptionally, the reference does not contain a Mailpoint address, any reply should be addressed to Mailpoint A (cases in England and Wales only).

Most cases referred to the VOA will be dealt with by the Primary Compliance and Support (PC&S) teams in HMRC(IHT). Because PC&S operate on a team-working basis, no individual team member has responsibility for a particular case. Consequently any email queries DVs have on such cases should be sent to the designated Mailpoint. For telephone enquiries please see below.

The Compliance groups in HMRC(IHT) normally deal with the more complex references. Here individuals do have responsibility for particular cases; however, DVs should only contact them direct by email when they are sure that they are ready to receive the message.

Written communications should normally be sent via the Cumbernauld Distribution Centre; or in exceptional circumstances, by either Taxpost Direct or fax.

In the case of general enquiries or where the direct line number of the HMRC(IHT) caseworker is not known (eg. where the DV only has details of the sectional Mailpoint involved), HMRC(IHT) can be contacted by telephone on the following numbers:

HMRC(IHT) (Ferrers House, Nottingham)
0845 302 0900 (Helpline)

SAV (Fitz Roy House, Nottingham)
0115 974 2222

HMRC(IHT) (Meldrum House, Edinburgh)
0131 777 4050

HMRC(IHT) (Dorchester House, Belfast)
02890 505353

Additionally, if the DV has specific queries regarding cases being handled by the PC&S team in Ferrers House (i.e. Mailpoint G cases); calls can be directed to a number of dedicated extensions. These are:

0115 974 2653

0115 974 2619

To avoid bogus enquiries the caller must identify him/herself at the start of the conversation, by name and office, as HMRC(IHT) have similar instructions to those contained in the Disclosure of Information Manual 1.16.

Telephone calls to enquiries extensions should normally be limited to the obtaining of factual information but, should clarification be required, the assistance of the HMRC(IHT) Liaison Officer with the VOA (who can be contacted on 0115 974 2876) or the Valuation Office Liaison Officers (VOLO) at CEO (DVS) may be requested.

26.9 Occasions giving rise to reference

There are three main occasions when HMRC(IHT) will refer an IHT case to the VOA, namely:-

  • chargeable transfers of value on the occasion of a death;
  • chargeable transfers of value made during a person's lifetime;
  • chargeable transfers of value in connection with settlements.
26.10 Method of issue

Most cases are issued to the DV or MV, as appropriate, by HMRC(IHT) via Taxpost Direct or the Cumbernauld Distribution Centre.

Cases issued to the Nottingham Initial Appraisal Unit (IAU) will be hand delivered direct to the unit

Types of Reference

26.11 General

Prior to issuing instruction to the VOA, HMRC(IHT) will classify a reference into one of 2 categories. These categories will, in turn, help to determine which case complexity weighting is allocated to a case when it is received in the VOA (see 26.31 below). These categories are:

  • Standard references (see 26.12 below).
  • Complex references (see 26.13 below).
26.12 Standard references

Standard references will be made in all cases where HMRC(IHT) is satisfied that the estate does not fall within the definition of a Complex reference (see 26.13 below). All cases (other than PC&S cases referred to the IAU) will be referred to the VOA on Form VOA 1 (see 26.15 below). The vast majority of cases referred on VOA 1 will be references from the PC&S team in HMRC(IHT).

Where a PC&S case is referred to the IAU, the reference papers will include HMRC(IHT)’s own case file (see 26.19 below).

26.13 Complex references

Complex references will be made in all cases where HMRC(IHT) is satisfied that one or more of the items returned falls within at least one of the following definitions:

  • Cases where Agricultural Relief has been claimed and the DV is required to advise whether it is considered that the farmhouse and buildings are of a character appropriate to the property (see Section 9).
  • Cases where Agricultural Relief has been claimed and HMRC(IHT) requires DV's assistance to help determine whether land or buildings fall within the definition of agricultural property (see Section 9).
  • Cases where Woodland Relief has been claimed (see Section 10).
  • Cases where Business Relief has been claimed and HMRC(IHT) requires the DV's assistance to help determine whether an asset comprises relevant business property (see Section 11).
  • Cases where conditional exemption has been claimed in respect of a property on the grounds that it is either a qualifying National Heritage property or it is to be included in a maintenance fund required to be provided for the upkeep of such property (see Section 20). NB. such cases should be referred to the DV via CEO.
  • Cases involving lifetime transfers, where land has been retained by the donor, or involving gifts with reservation (see Section 4 para 4.16 and Section 4 para 4.35).
  • Cases where the property is structurally damaged and HMRC(IHT) requires a valuation which includes the benefit of an insurance policy or a right to claim against a third party (see Section 7 para 7.35).
  • Cases involving the Mineral Valuer (see 26.36 - 37 below).
  • Cases involving the valuation of goodwill (see Section 16 paras 16.14 - 18).
  • Cases involving the valuation of partnership property (see Section 19).
  • Cases where the estate comprises four or more properties situated within a single DV area.

All such cases, with the exception of e. above will normally be referred to the VOA on Form VOA 2 (see 26.16 below). The majority of cases referred on VOA 2 will be references from the Compliance groups in HMRC(IHT).

Forms of Reference

26.14 General

Most references from HMRC(IHT) will be made on either Form VOA 1 or Form VOA 2. These forms will normally be accompanied by either Form D12 (in the case of references on death) or Form IHT 37 (for references in respect of lifetime transfers and settlements) which will include a schedule of the properties to be valued.

HMRC(IHT) will also occasionally issue a covering memorandum as a supplement to the details contained on the forms and, in exceptional circumstances, will forego the use of the forms and will issue instructions direct by memorandum.

26.15 Form VOA 1

Form VOA 1 (pink paper) is entitled "Request for initial VOA case appraisal" (see Appendix 2) and will be used in cases where HMRC(IHT)has classified the referral as being a Standard reference in accordance with 26.12 above.

It may also be accompanied by Form VOA 3 (see Appendix 3A) which will provide any supplemental information.

Form VOA 1 contains the following information:

  • the name of either the deceased, transferor or settlement as appropriate;
  • the nature of the occasion giving rise to the reference (see 26.9 above);
  • the date at which the property is to be valued (this will normally be the same date as the occasion giving rise to the reference);
  • details of the tax threshold and the cumulative value of the estate;
  • where the rate at which tax is to be charged is other than 40%, details of the rate at which tax is to be charged will be provided (see Section 27 para 27.7 for additional details). NB. This box will also be completed in the case of sub-threshold estates where, if tax is to be charged, the rate will be other than 40%;
  • where an item to be valued is not an entirety interest, the size of the relevant share (see Section 18);
  • whether the related property provisions apply to any item (see Section 15)
  • where the case is a multi-district case, details of the other DV unit areas involved (see 26.29 below);
  • whether there are any attachments, eg. plans, copies of leases, professional valuations etc;
  • HMRC(IHT)reference, cost centre, a telephone contact number and (sometimes) details of the HMRC(IHT) caseworker, if a specific individual has been nominated at that stage
  • details of the HMRC(IHT) office and Mailpoint to which any reply should be sent (see 26.8 above);
  • any other specific instructions or matters of interest to the DV (NB. In some instances, this section may be extended on to a separate form, VOA 3 (see Appendix 3A).

There is also a box for completion in the VOA when Form VO1120 is completed and returned to HMRC(IHT) in accordance with Section 27 para 27.9 et seq.

26.16 Form VOA 2

Form VOA 2 (purple paper) is entitled “Request for full VOA evaluation” (see Appendix 3) and will be used in cases where HMRC(IHT) has classified the referral as being a Complex reference (see 26.13 above).

In addition to the information contained on Form VOA 1 (see 26.15 above), it will also indicate either on the form or by way of a covering memorandum why the reference is considered to be a Complex one.

NB. for non-taxpaying cases involving claims for Agricultural Relief/Business Relief, the Cumulative Value of the estate shown on VOA 2 will be net of the reliefs claimed.

26.17 Form D12

Form D12 (see Appendix 8) is a form used in death cases and comprises part of the IHT 200, which will normally have been completed by the personal representatives of the deceased. If, exceptionally, it has been completed in HMRC(IHT), the form will indicate that this is the case.

Form D12 provides the following information:

On the front of the form

  • Details of the name, address, reference and telephone number of the taxpayer's representative who the caseworker should contact if necessary. NB. This should almost always be the solicitor or the Personal Applicant, (rather than the surveyor or valuer) in order to facilitate arranging inspection etc.)
  • Details of the land and buildings owned by the deceased. In particular:

a) each item of property is to be numbered

b) the full address (including postcode) of each item is to be included wherever possible; alternatively a full description and plan should be provided so that the property can be identified. This section will also include details of the deceased's share in the case of jointly owned property (NB. This may well be different to HMRC(IHT)'s valuation requirements included on Form VOA 1 or VOA 2)

c) includes details of the deceased's interest in each item and, if leasehold, details of the rent paid

d) includes details of any lettings to which an item was subject. If an item was let the parties should provide HMRC(IHT) with a copy of each lease, sub-lease and business or agricultural tenancy agreement. If the lease does not say so, or there is no written agreement, the parties should provide HMRC(IHT) with details of:

  • the date the tenancy/lease began
  • the length of the tenancy/lease
  • the rent payable and whether it can be reviewed
  • who is responsible for the outgoings
  • the name of the tenant.

If any item was unoccupied at the date of death, the parties should write "vacant" in this column.

e) includes details of any agricultural relief, woodland relief or heritage exemption claimed

f) includes details of the parties' opinion of the open market value of each item as at the date of death. If any item was jointly owned, the parties should state their opinion of the value of the deceased's share and show how this figure has been calculated.

On the reverse of the form

  • Whether any items were subject to damage which could have been subject to a claim under buildings insurance (see Section 7: para 7.35). If the parties confirm that there were any such items, they should provide details of the damage (including any surveys or engineer's reports) and state whether the deceased held an insurance policy covering all or part of the remedial works.
  • Whether any item has been sold or is intended to be sold within the next 12 months. If the parties confirm that there are any such items, they should provide details of:

g) the Item Number (from 2a above)

h) the current position re the sale, ie. whether the property:

has already been sold (giving date of exchange of contracts/completion of missives),

is on the market for sale, or

is to be sold later on

i) the asking price, or sale price

j) where an item has sold, the type of sale, ie. whether it was at "arm's length"

k) whether the sale price includes any amount for fixtures and fittings, carpets, curtains etc.

l) whether the parties wish to adopt the sale price as the date of death value.

26.18 Form IHT 37

Form IHT 37 (Appendix 7) is used in case references in respect of lifetime transfers and settlements and contains similar information to Form D12 above. (If the parties happen to use older versions of Form IHT 37, the information supplied may not be as comprehensive as that in the latest version and/or in the D12 – in particular the prospective sale data may not be provided).

26.19 References to the Initial Appraisal Units (IAU)

The Nottingham IAU is a small unit of VOA staff located in HMRC(IHT)’s Head Office in Nottingham. The unit currently carries out Initial Appraisals (see section 27 para 27.2 et seq) of certain cases falling within agreed parameters. These are currently:

  • All the real property, chargeable to Inheritance Tax, is domestic and is situated within either England or Wales;
  • The value returned for each individual item must be £500,000 or less;
  • The reference is not one that would normally be submitted on Form VOA 2 (see 26.13 above), apart from cases where the estate comprises four or more properties situated within the geographical area covered by the IAU;
  • The reference does not involve the valuation of a leasehold interest which had less than 60 years to run at the date of valuation;
  • HMRC(IHT) has not requested specific advice (e.g. querying whether the DV has any record of recent expenditure on a property)

The case papers passed to the Unit will comprise HMRC(IHT)’s own case file and any specific valuation requirements (e.g. for undivided shares) will be included in the accompanying Route 6 or VOA 1 form (N.B. for non-taxpaying cases, the Route 6 Form should also include details of the current cumulative value for IHT purposes).

When, following an Initial Appraisal (see Section 27 para 27.14), the IAU is unable to accept a returned figure, the case papers will be transferred to the Registration Centre for the DV Unit in whose area the property is situated. Because the case papers will have been prepared in the IAU, no Form VOA1 or VOA2 will normally be included with the reference (the exception is with regard to those references from the Compliance groups in HMRC(IHT), where references to the IAU will be made on the VOA 1 rather than the Route 6 form’ or cases referred to the IAU from the Edinburgh or Belfast offices of HMRC(IHT)) . The papers will normally comprise:

  • A photocopy of Form D12 (see 26.17 above);
  • A photocopy of the completed Route 6 form, or the original VOA 1 form;
  • A photocopy of any valuation submitted with the papers;
  • A TRACS sheet;
  • A History Working Sheet;
  • A copy of the Digital Map outlining the subject property in red;
  • An Initial Appraisal Control Sheet.

There is also a small IAU in the Glasgow office of the VOA. This unit carries out an initial appraisal of all first reference cases, where the property involved is located in Scotland.

26.20 Other requests for advice

HMRC(IHT) may also request either an informal opinion of value or general advice concerning an estate. Such requests will normally be made by memorandum and, unless otherwise directed by HMRC(IHT), the DV should comply with them on the basis of information available, and without inspection or reference to the parties. Examples of such requests will include:

  • when property passes on the death of a life-tenant/liferenter or an annuitant and HMRC(IHT) desires to ascertain, before raising a claim, whether the resultant cumulative total at the date of death exceeds the tax threshold;
  • cases where information is received by HMRC(IHT) about a death otherwise than by way of an Inland Revenue account an informal opinion of value may be requested.

References from Shares and Assets Valuation, Inspector of Taxes and Other Sources

26.21 References from Shares and Assets Valuation

Shares and Assets Valuation cases will be referred in accordance with the procedure set out in Section 16.

26.22 References from Inspector of Taxes

In certain instances an Inspector of Taxes may directly request a value ascertained for IHT purposes (see CGT Manual : Section 6 Part 7).

26.23 References from Other Sources

Should an officer from any non-Her Majesty’s Revenue & Customs body raise any question of value in connection with an IHT case, the facts should be referred immediately to CEO (DVS).

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