This case was referred to our firm by another firm of accountants in London. The client had inherited some properties a few years ago that they wanted sell. The issue was that the valuation used for probate purposes was quite low compared to market value at the time of death which meant that the capital gains tax on sale would be significantly higher. Our team of tax specialists took on the case an applied to HMRC’s valuation team to get a correct valuation. HMRC initially objected to our proposals but having provided sufficient supporting evidence comprising property valuations and sold prices, we were able to agree a figure with HMRC that was much closer to our initial proposal. The agreement by HMRC’s valuation office meant that our client’s capital gains tax liability was reduced to a fraction of the initial figure before we took on the case. The client was over the moon with the savings.
Our analysis: At the time the case was referred to us, our clients or their accountants had not even thought about getting a valuation agreed from HMRC’s specialist unit in order to reduce the liability. Due to our long running experience in our dealings with HMRC, this strategy was discussed with the client and they were quite happy with the idea. The tax savings achieved by our client were far higher than their expectations. It is always a good idea to seek advice from a tax specialist as this can bring substantial savings compared to costs.
This client was referred to us by an accounting firm in London. The client had a bereavement in the family and the deceased was subject to significant inheritance tax due to the size of the estate. After long discussions and research into the deceased’s family and background, our specialist tax advisers were able to propose various post-death tax planning strategies to enable the tax liability to be completely eliminated. The tax planning structure was based on existing HMRC practices and the legislation which are often overlooked by advisers.
Our analysis: Inheritance tax is the only tax that can be significantly mitigated or even completely eliminated provided specialist tax planning advice has been taken and sufficient time has been allowed. We have come across a number of situations where clients come to us at a very old age and not much can be done other than some basic tax planning. We have also experienced families having to sell properties in order to pay the deceased’s inheritance tax. In some other cases, where we have been approached at a very late stage for inheritance tax advice, some of our clients have had to take very expensive insurance policies to cover the tax bill in case of death within in a certain time frame.
In the above situation, our client was quite lucky as there were some special exemptions that could be used to reduce the inheritance tax liability. These exemptions are not available to all individuals and our recommendation has always been to seek specialist advice at an early stage.