HM Revenue and Customs (HMRC) will not hesitate to bring criminal proceedings when tax evasion is significant, as the recent jailing of a woman who under-declared the Inheritance Tax (IHT) due on her mother’s estate proves.

The executor declared that the value of her late mother’s taxable estate to be approximately £285,000, well under the IHT threshold which is currently set at £325,000. The executor had, however, received substantial cash gifts within the seven years prior to her mother’s death, which should have been included on the IHT returns. The correct value of the taxable estate for IHT purposes exceeded £1.5 million, meaning that the IHT liability on the estate was approximately £500,000.

Pleading guilty to cheating the Exchequer, she was ordered to be jailed for 32 months.

There are a number of ways such evasion can be detected by HMRC.  For example, they operate a tax evasion hotline, they can cross-check values of properties sold against the relevant IHT returns, they can use information gleaned from one tax enquiry to start another and they are sometimes able to ascertain that the way a person lives is not commensurate their disclosed financial means.

Please contact us for expert and professional advice to ensure that you fully meet your responsibilities as an executor.