HMRC have reported that an increasing number of errors are being made in inheritance tax reporting.

The errors are made in completing form IHT403 (gifts and other transfers of value) and claiming an exemption for Normal gifts out of income. This can lead to delays in HMRC processing forms and additional queries being raised about the deceased's income or expenditure.

HMRC have issued a reminder that where this exemption is being claimed:

  • Box 6 on page 1 should be ticked.
  • Details of the gifts must be included on page 3.
  • Details of the deceased's income and expenditure during the period that the gifts were made must be included either on page 8 or on a separate schedule included with the form.
  • Relevant documents should also be sent which should support information that is included on the form; sending documentation does not remove the requirement to complete the form.

Tax geared penalties may apply for careless errors under Schedule 24 FA 2007 in the event of a loss of tax.

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