HMRC is intensifying its scrutiny of property valuations in a bid to combat inheritance tax avoidance. This initiative comes as no surprise, given the importance of accurate property valuations in tax assessments.
Increase in Case Referrals to the VOA
Recent research by TWM Solicitors highlights a significant rise in cases referred to the Valuation Office Agency (VOA). The data indicates a 23.5% increase in referrals over the past year.
- Referrals rose from 11,845 to 14,631.
- This increase spans the 12-month period ending on 30 September 2025.
HMRC’s Focus on Property Valuations
Laura Walkley, Head of Private Client at TWM, states that HMRC is zeroing in on property valuations as a crucial revenue source. There has been a clear shift towards questioning the figures provided in inheritance tax (IHT) returns.
Implications for Executors
Executors must be diligent when reporting property values. Failing to do so can lead to financial repercussions for the estate and potentially for the executor personally. Additional tax payments and interest could be assessed as a result of inaccurate valuations.
Enhanced Collaboration with the VOA
TWM notes that HMRC’s collaboration with the VOA has intensified. The agency is increasingly involved in scrutinizing IHT returns, reflecting a commitment to recovering lost revenue from under-reported estates.
Changing Landscape of Property Valuations
Previously, lawyers might only hear from the VOA concerning probate valuations once or twice in several years. However, the frequency of these inquiries has increased significantly.
Contributing Factors to Increased Scrutiny
Several factors have contributed to this heightened scrutiny:
- Rising property values and asset prices.
- Frozen inheritance tax thresholds.
- More individuals becoming subject to IHT as property values rise.
Technological Advances in Identifying Errors
HMRC is leveraging artificial intelligence and advanced data matching techniques. These tools enhance its capability to identify discrepancies and errors in IHT returns, further bolstering its scrutiny of property valuations.
As the landscape of property valuation continues to evolve, stakeholders must remain vigilant to ensure compliance with HMRC regulations. Accurate property assessments are crucial in avoiding unnecessary tax liabilities.
