How Does HMRC Investigate Inheritance Tax?
HMRC investigates inheritance tax using data-matching systems that cross-reference submitted IHT returns against land registry records, income tax and capital gains records, and Companies House data. Discrepancies between declared asset values and known records are the most common trigger for an inquiry.
The numbers have been climbing. In the year to April 2025, HMRC opened over 4,000 formal IHT investigations, up roughly 37% from the previous year. IHT receipts reached £8.2 billion in 2024/25, driven by frozen thresholds and rising property values. HMRC is looking harder than it used to.
Common triggers include undervalued property, unreported gifts made within 7 years of death, omitted personal possessions such as jewellery and antiques, undisclosed investments, and life insurance policies not written in trust. HMRC also reviews bank statements for regular premium payments that might indicate a life insurance policy, or income patterns suggesting hidden assets.
During an investigation, HMRC can request up to 7 years of bank statements, valuations, gift records, trust documents, and details of offshore accounts. A typical investigation lasts 6 to 12 months. Complex or suspected fraud cases can run for several years.
HMRC can look back up to 20 years where deliberate non-compliance is suspected. Penalties for careless errors range from 30% to 100% of the extra tax owed, with deliberate evasion attracting the higher end. Accurate valuation, full disclosure, and proper records are the best protection against an inquiry.
If you are a beneficiary wondering whether you need to contact HMRC yourself, our guide on whether you have to inform HMRC after inheriting money covers your personal obligations.
The numbers have been climbing. In the year to April 2025, HMRC opened over 4,000 formal IHT investigations, up roughly 37% from the previous year. IHT receipts reached £8.2 billion in 2024/25, driven by frozen thresholds and rising property values. HMRC is looking harder than it used to.
Common triggers include undervalued property, unreported gifts made within 7 years of death, omitted personal possessions such as jewellery and antiques, undisclosed investments, and life insurance policies not written in trust. HMRC also reviews bank statements for regular premium payments that might indicate a life insurance policy, or income patterns suggesting hidden assets.
During an investigation, HMRC can request up to 7 years of bank statements, valuations, gift records, trust documents, and details of offshore accounts. A typical investigation lasts 6 to 12 months. Complex or suspected fraud cases can run for several years.
HMRC can look back up to 20 years where deliberate non-compliance is suspected. Penalties for careless errors range from 30% to 100% of the extra tax owed, with deliberate evasion attracting the higher end. Accurate valuation, full disclosure, and proper records are the best protection against an inquiry.
If you are a beneficiary wondering whether you need to contact HMRC yourself, our guide on whether you have to inform HMRC after inheriting money covers your personal obligations.
Getting the figures right is one half of it. Paying on time is the other, and the deadline lands sooner than most executors expect: see do you pay inheritance tax before probate.
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