C4 corrective account query

Nightmare_on_iht_street_23

I’d be grateful for some help. I’m dealing with my father’s estate. IHT400 submitted, tax paid and probate granted. The VOA decided it did not like our red book property valuation and we haggled and have just paid the additional iht (plus % calculated through the online calculator). Do I need to submit a C4 for this or will HMRC contact me? Also the property is due to be sold shortly for (guess what) less than the probate value. Do I need to put this in a C4 as well as make the claim for loss on sale on IHT38? Any help would be appreciated. I feel pretty ground down by this process!

poseidon1

 Just to be clear, on the one hand you are saying the intervention of VOA led to increase in the original probate value submitted ( and therefore extra IHT) but an impending sale of the property will ultimately  result in a loss compared to the uplifted probate value, thereby justifying IHT relief via IHT38?

 I believe you should send both the C4 and IHT38 after the concluded sale, which would then allow HMRC to do an offset and raise an  adjusting assessment based on the actual sale proceeds. Best to have all relevant formal documentation in place for posterity. I assume in this regard the difference does exceed HMRC's de minimis of £1,000?

When the dust settles you may get a small HMRC credit interest on your overpayment at 3%.

probate_slave

I read it as sale price coming out below the original probate value. (Why does the VOA always behave like this?) But entirely agree with Poseidon that you should send in C4 (for the increase) and IHT38 (for the loss) together, along with a covering letter. The officer should then know to refund both the overpayment requested by the VOA and the overpayment relative to original probate value. If you ignored the C4 they might possibly neglect the former. And this should hopefully prevent any need for further correspondence.
Then be prepared to wait up to a year for the repayment. Good luck!

Nightmare_on_iht_street_23

Thank you for responding. I am having to balance the property market against the needs of the beneficiaries. We would be lucky to get our original red book valuation price now, let alone the unnecessary uplift by the VOA. The property is in very poor condition and is in central London where there is a glut of sellers and a paucity of buyers. Hanging on for things to improve is expensive for the estate and we have a decent offer from a family member, so no IHT38 relief (I had forgotten that) but I will take your advice and submit a C4 to reflect the amended value agreed with the VOA. This would all be so much easier if each estate had some sort of online account to record the various steps! Thank you again for your input. 

mta999

would the fact that a (low) offer was made by a family member complicate things ?

poseidon1

mta999 said:

would the fact that a (low) offer was made by a family member complicate things ?

Sale to a beneficiary kills off the ability to make an IHT38  relief claim (not arms length open market disposal).
Appears OP realises this, so just submission of C4 sooner rather than later.

In passing OP, once you get the final assessment  and all IHT settled (or small refund obtained) suggest you submit an  IHT30 clearance certificate to put the IHT issue finally to rest.

Nightmare_on_iht_street_23

Thanks to all of you for clarifying the C4 point for me. To mta999, the offer matches the original red book valuation from end 2024. Since then the market has only got worse so the beneficiaries have taken a pragmatic approach. Yes, sales to family members are complicated on a number of levels all of which I have struggled with. On iht30, I had read that HMRC are not processing them at the moment (the odds really are stacked against you, aren’t they) but I will send one in anyway at what feels like a sensible point. I really appreciate the help. Thanks again.