HMRC are piloting a change in the way that they monitor of excepted estates and tackle non-compliance. Until now, in addition to a random selection of estates, they have endeavoured to always contact the taxpayer within the 35/60 day statutory clearance period when they have any questions relating to these grants. Within this brief window it is usually only property under-valuations on estates declared near to the value of the IHT nil rate band that have been identified.

HMRC are now comparing the data provided on death with data the deceased provided during their lifetime and information from other sources. HMRC will be focussing their attention on estates where all the information suggests that the estate does not meet the criteria to be an excepted estate. If an estate does not meet those criteria the statutory clearance will not apply (as the estate was not within the excepted estate regulations at the outset) and so HMRC may write to the taxpayer some time after the 35/60 day period has expired. HMRC will only be pursuing those cases where their evidence strongly suggests that the estate was never an excepted estate. If HMRC uncover systematic failings in the processes agents go through in preparing an application for an excepted estate grant, they may wish to visit you to discuss where improvements might be made. HMRC recently met with a number of professional bodies to explain this new approach and discuss it with them.

David Key