Inheritance tax manual - Section 26 - Part 3 : Procedure on receipt of References

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Part 3 : Procedure on receipt of References

26.24 Knowledge of cumulative total for IHT

Caseworkers should avoid indicating to the parties that they are aware of either the cumulative value for IHT, the tax threshold or the rate of tax.

26.25 Classification of cases

The Service Level Agreement between HMRC(IHT) and the VOA defines a case as a reference to an individual DV or MV from HMRC(IHT), related to a single taxable event at the same valuation date, irrespective of the numbers of properties involved.

A case arising from a single taxable event but relating to properties within separate DV unit areas, or relating partly to minerals, will constitute separate cases for each of those DVs or MVs. Such cases are known as "part" or "multi district" cases (see 26.28 below).

If a single form of reference is received from HMRC(IHT) requesting valuations at two valuation dates, the reference should be treated as two separate cases and HMRC(IHT) should be advised accordingly when acknowledging receipt (see 26.32 below).

N.B. A reference to the Nottingham IAU in respect of a deceased’s estate will always comprise a single reference whilst it is being dealt with by the unit (see 26.29 below).

For the registration and recording of cases see the Revenue Process Maps and the Caseworker Support Material which can be found on the intranet. IHT cases are classified as follows:-

Initial Appraisal (see Section 27 para 27.2)

case type 177/01

Valuation (see Section 27 para 27.14)

case type 180/01

26.26 Misdirected cases

If, on receipt of a reference from HMRC(IHT), it is discovered that none of the property requiring to be valued is situated within that DV unit area, after cancelling any office stamp and correcting the office number, the papers should be sent immediately to the DV unit concerned and HMRC(IHT) should be advised of the action taken.

If, on receipt of a reference from HMRC(IHT), it is discovered that some of the property requiring to be valued is situated outside that DV unit area, and HMRC(IHT) has not indicated on Form VOA 1 or VOA 2 that the case is a multi-district case, the relevant papers should be copied and sent immediately to the DV unit concerned and HMRC(IHT) should be advised of the action taken. Thereafter the case should be treated as a multi-district case (see 26.28 below).

26.27 Papers incomplete

Where the papers referred by HMRC(IHT) are clearly incorrect or incomplete they should be returned to HMRC(IHT) together with a memorandum stating the reason for their return.

It must be emphasised that papers should only be returned in exceptional circumstances (e.g. where there is insufficient information to identify a property in order to register a case on CRAC) and every effort should first be made to obtain the requisite information, either by email or telephone (see 26.8 above). Once a case has been registered on CRAC, it should not be cancelled because the papers are subsequently considered to be incomplete but, instead, any clarification of instructions should be obtained from HMRC(IHT) as a matter of urgency. In references involving more than one item in the same DV unit area and where sufficient information exists to register a case on CRAC against at least one of those items, the papers should not be returned and, again, any clarification of instructions should be obtained from HMRC(IHT) as a matter of urgency.

If factual information is required in order to register the case (eg. Post code details), the parties named on Form D12 may be contacted in order to establish this. If essential information is required in order to carry out the valuation, the DV should proceed in accordance with Section 27 para 27.21 et seq.

26.28 Problem cases

Any request for advice which appears to give rise to difficulty or inconsistency, e.g. a request which, if complied with, would seem to conflict with normal valuation practice, should be referred to CEO (DVS) for confirmation prior to any action being taken.

26.29 Multi-district cases

Multi district (part) cases are defined at 26.24 above.

Such cases should be dealt with in the same way as single district cases. However, where similar types of property or similar interests in property exist in more than one DV unit area which are being dealt with by two or more caseworkers, it is important that any necessary liaison with other caseworkers is carried out prior to any values being reported, or before any proposed values are notified to the parties.

In the circumstances set out above it is the responsibility of the DVs involved to ensure that liaison is carried out. In cases involving two or more DVs, the co-ordinating role should normally be assumed by the DV with the greatest number of properties or, where more appropriate, the properties with the highest value. Where difficulty arises the views of CEO (DVS) should be sought.

N.B. A reference to the IAU in respect of a deceased’s estate will be treated as a single case, irrespective of whether the property comprised therein is located in more than one DV Unit area. If the returned values in more than one DV Unit area cannot be accepted the IAU is responsible for raising the required number of new cases, copying the papers and forwarding to each Registration Centre. In such cases the IAU will attach a covering letter setting out the new case numbers and the DV Unit they have been allocated to. On receipt of the case the Registration Centre will then make the case formal and obtain the new TRACS bar-codes.

26.30 Part Cases within a single DV unit area

For the avoidance of doubt, where a reference covers properties dealt with by two or more caseworkers within a single DV unit area, it will comprise a single case, with a single TRACS bar code.

In these circumstances, it will normally be up to the DV to decide which caseworker should act as the co-ordinating caseworker.

The co-ordinating caseworker will normally be the person who deals with the leading property, or has the more complex valuations. He/she will be responsible for sending any acknowledgements (see 26.32 below and Section 27 para 27.18), interim reports and issuing the final report on completion of the case.

26.31 Registration and recording of cases

For registration and recording of cases see Section 27, the Revenue Process Maps and the Caseworker Support Material which can be found on the intranet.

26.32 Case Complexity

In common with other casework received from HMRC, work from HMRC(IHT) is allocated one of four case complexity codes on receipt. The complexity code attached to a particular case is important as this will govern how much time and resources the VOA should dedicate to it.

The following criteria should be considered when deciding which code should be allocated to a particular case:

  • The tax at stake.
  • The number of properties involved.
  • The level of value.
  • The complexity involved.

All casework received from HMRC(IHT) must be coded using the following criteria:

Complexity 1

All cases not meeting the criteria for Complexity 2, 3, or 4 below.

Complexity 2

All cases referred on form VOA 2.

Cases where the cumulative returned value is between £500,000 and £1,500,000.

Cases involving the valuation of residential leasehold interests with under 60 years unexpired.

Cases where the valuation is likely to incorporate an addition for "hope" or "marriage" value, which is estimated at less than £100,000.

Complexity 3

Cases where the cumulative returned value exceeds £1,500,000.

Cases involving the valuation of estates which exceed 405 hectares (1,000 acres) in area.

Cases where the valuation is likely to incorporate an addition for "hope" or "marriage" value, which is estimated to be £100,000 or greater.

Cases where an Appeal Report is required (NB. this category does not include Initial Agricultural Relief Reports).

Cases where an Initial Agricultural Relief Report has been issued and HMRC(IHT) subsequently requests the DV to negotiate.

Complexity 4

Any case which involves the valuation of more than 4 “properties”.

In cases involving more than one property, the above cumulative returned value limits should be taken as the total of values returned at a single valuation date.

Any cases referred via CEO (eg. Heritage Relief cases), will contain specific instructions as to the initial complexity weighting to be adopted.

For the purpose of deciding how many properties are to be valued, a ‘property’ should be taken to be any separately identified valuation lot adopted by the taxpayer, where the returned value exceeds £5,000.

See Section 27 para 27.2, for procedures regarding the allocation of an initial complexity code and Section 27 para 27.14, for any subsequent alterations of complexity codes.

Once a case has been allocated a complexity code, details of this should be input onto CRAC.

26.33 Acknowledgements

For all references received from HMRC(IHT), see Section 27 para 27.18 and 27.81 with regard to acknowledgements. For the avoidance of doubt, where the case involves properties being dealt with by more than one caseworker within a single DV unit (see 26.30 above), HMRC(IHT) only requires a single acknowledgement from that unit.

In multi-district cases, each DV unit involved should send an acknowledgement.

Cases received from Shares & Assets Valuation on Form Val 63 are to be acknowledged within 5 working days of receipt.

26.34 Retention of case papers

Unless HMRC(IHT) has specifically requested their return, the DV should retain all case papers.

Minerals

26.35 Identification of responsibility

Where it is thought that the value of minerals, or any property for which the Mineral Valuer is responsible for rating purposes, may be involved (see Rating Manual - Volume 2: Section 11 and Management Circular No 806), caseworkers should proceed in accordance with 26.35 and 26.36 below as appropriate.

26.36 Forming a separate item

Where the mineral bearing land is, or should be, treated as a separate item (see Section 25), the DV should proceed in accordance with 26.25 above, forwarding the appropriate papers to the Mineral Valuer.

Where the mineral bearing land comprises a separate item and the parties have claimed that Agricultural Relief should apply to that item, the responsibility for dealing with the question of Relief lies with the MV.

26.37 Other cases

In other cases, where it is considered that the mineral bearing land forms part of a larger unit of valuation, the case should be treated as a “parent and child” case and all necessary information (including the case’s TRACS bar code) should be forwarded to the Mineral Valuer requesting advice as to the additional value, if any, in the unworked minerals.

Where the mineral bearing land does not comprise a separate item and the parties have claimed that Agricultural Relief applies, the responsibility for dealing with the question of Relief lies with the DV.

Other Specialist Advice

26.38 General

The services of the various specialist teams (e.g. the Business Assets and Machinery Team) are available for both valuation and negotiation. Requests for assistance should be made in accordance with the principles set out in Chapter 5 : Section 16 para 16.157 et seq.

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