Inheritance Tax Manual

Appendix 21: litigation general

The Valuation Office Agency's (VOA) technical manual relating to Inheritance Tax.


1. Introduction

The responsibility for litigation in Inheritance Tax cases rests with the HMRC(IHT) and the HMRC Solicitor. Members of the VOA will generally only be involved as an expert witness. When negotiations fail to produce an agreement DVs should avoid giving the impression that litigation will automatically follow.

2. The DOA report

Most cases of litigation involving the DV will start with an Appeal Report. Before this report is issued HMRC(IHT) will already have satisfied themselves, when replying to Part 5 of Form VO1103, that the circumstances warrant issuing a Notice of Determination. They do not however always issue this immediately on receipt of the report and may enter into correspondence with the parties. (The DV at this stage should not still be in negotiation). HMRC(IHT) may request more information from the DV and may even refer the case back to him/her, for example, after having agreed with the parties that a particular basis of valuation is appropriate.

3. Notice of determination

When HMRC(IHT) issue a Notice of Determination the parties have 30 days to appeal. An appeal to the Lands Tribunal can then be instigated by HMRC transmitting copies of the Notice of Determination and the appeal to the Land Tribunal. It is only HMRC that can do this and for that reason the taxpayer is always the appellant in IHT appeals. There is no time limit on the transmission of the appeal papers.

In practice if any appeal is received HMRC(IHT) will reconsider the matter in the light of the grounds of appeal. They will route any further requests for action from the DV via CEO (DVS). If satisfied that the case is worth pursuing HMRC(IHT) will normally pass the details to the HMRC Solicitor who will take over responsibility for transmission of the papers and conduct of the appeal.

4. Jurisdiction for hearing appeals

S.222 Inheritance Tax Act 1984 provides for appeals from determinations on Inheritance Tax matters generally to be referred to the Special Commissioners. Appeals on points of law are then referred to the High Court, Court of Appeal and (with leave) to the House of Lords. Where the matter in dispute concerns the value of land however appeals are heard by the Lands Tribunal with appeals on point of law to the Court of Appeal and (with leave) to the House of Lords.

In the majority of cases where the DV is involved therefore an appeal will be to the Lands Tribunal. Section 37 deals with the procedure for such an appeal and Appendices 23-25 with the preparation for the hearing. There may be circumstances however where the substantive issue is not the value of land or buildings but nevertheless this, or some other property related issue, may form part of HMRC’s case. Appeals in these cases will be heard by the Special Commissioners. Some details regarding the Special Commissioners can be found in Appendix 22 but in the event of a DV being required to give evidence before the Special Commissioners he/she will usually be provided with ad hoc instructions from CEO (DVS).

5. Conduct of the hearing

Any appearance by a DV before either the Lands Tribunal or the Special Commissioners will be as an expert witness. Responsibility for advocacy will normally lie with the HMRC Solicitor, or, exceptionally, with HMRC(IHT). Proceedings are quite formal and compliance with the rules governing each body is important, particularly in the context of producing documentation within the required time limits. Reference should be made to appendices 22-25 in this respect.