HMRC to 'consider Covid' in late IHT returns

HMRC to 'consider Covid' in late IHT returns

HM Revenue & Customs has indicated it will show leniency if an inheritance tax return is delayed as a result of the coronavirus crisis. 

The government was made aware of concerns surrounding the 12-month deadline for filing a return and six-month deadline for payment of inheritance tax during the pandemic and associated lockdown in a parliamentary question submitted by Olivia Blake, MP for Sheffield Hallam.

She asked the Treasury what could be done for people who faced a bereavement during lockdown and would struggle to meet the six-month payment deadline. 

Jesse Norman, financial secretary to the Treasury, said: "Where a taxpayer is unable to file their return on time because of Covid-19, HMRC will consider that within the scope of a reasonable excuse and as grounds for appeal against late filing penalties.

"The government continues to explore all avenues to help those affected." 

Inheritance tax is currently levied at a standard rate of 40 per cent on the value of an estate above the £325,000 threshold. 

Advisers have been readying themselves for a growing number of retail investors seeking inheritance tax advice over the coming years, alongside predictions of a rush to launch inheritance tax products and investment services in the UK market. 

Tracy Crookes, financial planner at Quilter Private Client Advisers, warned the six-month payment and 12-month filing deadline meant families had to act quickly to value estate assets and settle any tax owed. 

Ms Crookes said: "This can be complex at the best of times as the executor may be dealing with loss and grief, while trying to get a handle on someone’s financial affairs, which are often complicated. 

"When there are restrictions on movement and contact with other people, things like obtaining a valuation on assets might be difficult."

She added: "Although the penalties for late filing will still apply and nobody should assume that they can miss the deadlines, the government has indicated an appeal should be successful if it can be demonstrated that there was a delay caused by Covid-19."

Ms Crookes also warned generating cash to meet the inheritance tax bill may not be straightforward if the estate is asset rich but cash poor, especially where a property needs to be sold in the current environment. 

What do you think about the issues raised by this story? Email us on to let us know.