probate property valuation less than current estate agent valuation

Tom99

[FONT=Verdana, sans-serif]The Inheritance Tax office will allow probate to be granted before confirming whether they are happy with the property valuation.

[/FONT] [FONT=Verdana, sans-serif]If inheritance tax is due they will refer the value to the Valuation Office which may take some months.

[/FONT] [FONT=Verdana, sans-serif]You need to ask the Inheritance Tax office for confirmation that they are happy with all the figures provided and that all due Inheritance Tax has been paid.

[/FONT] [FONT=Verdana, sans-serif]If the estate then sells the property for a higher value CGT will be due on the difference in value but there are allowances to set off against CGT.

[/FONT] [FONT=Verdana, sans-serif]If CGT is payable and there is more than one beneficiary then consider transferring the beneficial interest in the property to the beneficiaries before it is sold. That way each beneficiary will get a £11,300 allowance.[/FONT]

Crabapple

Yorkshireman99 wrote: »

So you are saying that HMR&C pass the return and payment without checking it first?

No, I'm saying they don't 'pass' the return or check it until much later. They just confirm they have it which allows probate to be granted.

EasySolution

when a solicitor or other professional is administering a Probate they ask HMRC for a Clearance Certificate before they distribute the estate.

Tom99

Probate can be granted quickly but the IT Office will reserve the right to query the values returned and this may take some months.

I finally have a letter from the IT Office saying they will not be making any further queries. I would have prefered a straight forward reply that all tax due had been paid but I expect the letter I have is the best I am going to get.

eddyinfreehold

Tom99....

...thanks for your post above, you are a few weeks (or months) ahead of me in this journey. Could you answer a couple of questions for me?
1. You have the 'no further queries' letter from HMRC Nottingham. Are you or your agents going to submit an IHT30 now to HMRC to obtain a clearance certificate or are you just going to assume the job is complete?
2. From receiving the initial letter and tax calculation from Nottingham allowing you to obtain a Grant of Probate and the final 'no further queries letter' , what period of time was involved? We obtained Probate in late December 2016 and haven't heard a peep since. I'd be really interested to know how long they took with your business and whether any correspondence took place in the meantime.


YM99:

My understanding is the same as Crabapple. The initial letter I received said they would look in more depth at the account but in the meantime they made some minor corrections to the calculation and receipted the amount of IHT that had to be paid initially. Some of the wording on that 2 page letter is interesting, I quote....

"Provisional Calculation

We have not yet looked at your form IHT400 in detail. This is because we want the Grant for this estate to be issued quickly. We've calculated the amount of tax (and any interest) we think is due - we call this a Provisional Calculation."

"What happens now

When we look at your form IHT400 in more detail we may ask you for some more information, for example, a District Valuer may get in touch with you to discuss the value of any houses or land in the estate. This means that the amount of tax and interest shown in provisional calculation may not be the final amount.
We cannot tell you how long it will take to establish the final amount of tax due as each estate we look at is different. It may take a few weeks if the estate is simple or several months if the estate is more complicated."

...sorry if it's a bit of a long post but that is the exact wording I got from HMRC showing that it is not the initial valuation signed off and approved at the Probate stage, that comes much later after their valuation and checks.

I hope this helps.

Tom99

eddyinfreehold wrote: »

Tom99....

...thanks for your post above, you are a few weeks (or months) ahead of me in this journey. Could you answer a couple of questions for me?
1. You have the 'no further queries' letter from HMRC Nottingham. Are you or your agents going to submit an IHT30 now to HMRC to obtain a clearance certificate or are you just going to assume the job is complete?
2. From receiving the initial letter and tax calculation from Nottingham allowing you to obtain a Grant of Probate and the final 'no further queries letter' , what period of time was involved? We obtained Probate in late December 2016 and haven't heard a peep since. I'd be really interested to know how long they took with your business and whether any correspondence took place in the meantime.


YM99:

My understanding is the same as Crabapple. The initial letter I received said they would look in more depth at the account but in the meantime they made some minor corrections to the calculation and receipted the amount of IHT that had to be paid initially. Some of the wording on that 2 page letter is interesting, I quote....

"Provisional Calculation

We have not yet looked at your form IHT400 in detail. This is because we want the Grant for this estate to be issued quickly. We've calculated the amount of tax (and any interest) we think is due - we call this a Provisional Calculation."

"What happens now

When we look at your form IHT400 in more detail we may ask you for some more information, for example, a District Valuer may get in touch with you to discuss the value of any houses or land in the estate. This means that the amount of tax and interest shown in provisional calculation may not be the final amount.
We cannot tell you how long it will take to establish the final amount of tax due as each estate we look at is different. It may take a few weeks if the estate is simple or several months if the estate is more complicated."

...sorry if it's a bit of a long post but that is the exact wording I got from HMRC showing that it is not the initial valuation signed off and approved at the Probate stage, that comes much later after their valuation and checks.

I hope this helps.

[FONT=Verdana, sans-serif]No I am not going to use ITH30 and am going to take it that the 'no further queries' letter is the last I will hear from them. All the calculated IT has been paid and their latest statement says £0 balance outstanding.

[/FONT] [FONT=Verdana, sans-serif]Probate granted Feb, house sold Aug and 'no further queries' letter Oct after chasing them on the phone.

[/FONT] [FONT=Verdana, sans-serif]I have now written to the CGT office to report the sale to them but have not heard back.

[/FONT] [FONT=Verdana, sans-serif]Before probate was granted I had exactly the same letter as you saying further queries may be made.

[/FONT] [FONT=Verdana, sans-serif]In July, once I knew the house sale had been agreed, I rang the Valuation Office and they confirmed they had been asked to look at the value and that they had reported back to the IT that they were happy with the probate value I had used.[/FONT]

Yorkshireman99

It just confirms that HMR&C are a law unto themselves. Cowboys comes to mind!

eddyinfreehold

Tom99

Thank you sir. It looks like we might be close to something happening then. I must be patient.

YM99

More lost sheep than cowboys I feel. Everything I've heard is that they are understaffed and all the experienced personnel have gone. It reminds me of the Passport Office fiasco a few years ago, when whole buildings were stuffed with pending applications.

Tom99

[FONT=Verdana, sans-serif]Once you have probate you can sell the property before you have IT 'clearance' so you need to think about CGT before selling using £450k as the purchase price.

[/FONT] [FONT=Verdana, sans-serif]It there is more than one beneficiary and you will not need funds from the sale of the house to pay IT then I would Assent the property to the beneficiaries before exchange of contracts. That way each beneficiary will get the £11,300 annual allowance rather than just one allowance for the estate.

[/FONT] [FONT=Verdana, sans-serif]You do not need to transfer the legal title to them, only Assent the beneficial interest and it does not need to be registered at the LR, so no delay, but must be signed before exchange of contract. A decent solicitor should be able to do this for about £300.

[/FONT] [FONT=Verdana, sans-serif]You can leave it until you know the sale price, them work out the likely CGT bill to see if it is worth it and, if it is, prepare the Assent at the same time contracts are being prepared.

[/FONT] [FONT=Verdana, sans-serif]Don't forget to allow all the set off's to CGT when you work out a figure, EA and legal on sale, EPS and costs of obtaining probate (at actual cost or at HMRC scale cost)[/FONT]

eddyinfreehold

Correct Tom99. Similarly each beneficiary can apportion half their gain to their spouse if legally married, thus doubling the CGT allowance per couple.