Limitation of liability by lapse of time: time limits for recovery of unpaid tax
No person is liable to pay additional Inheritance Tax that is attributable to any property after four years from the later of;
- the date on which the payment (or in the case of tax paid by instalments (IHTM30191) the last payment) was made and accepted, and
- the date on which the tax or the last instalment became due
where tax attributable to that property is paid in accordance with an account duly delivered to the Board and the payment is made and accepted in full satisfaction, IHTA84/S240(2).
If, however, the loss of tax was brought about ‘carelessly’ the time limit for recovering any additional tax is six years; IHTA84/S240(4) and where the loss of tax was brought about ‘deliberately’ the time limit is twenty years, IHTA84/S240(5).
The account referred to is the IHT100 or IHT400 initially delivered by the taxpayer.
Any HMRC charge on the property expires at the same time.
Where no account has been delivered, IHTA84/S240(2) cannot apply. Instead IHTA84/S240(7), applied by IHTA84/S240(6), sets a twenty year time limit where no account has been delivered and the loss of tax was not brought about deliberately by the person liable for the tax, or a person acting for them.
It follows, where no account has been delivered and the loss of tax was brought about deliberately by the person liable for the tax, or a person acting for them, that there is no time limit for the recovery of the unpaid tax.
Similarly, where an account has been delivered but which omitted an asset that is later disclosed, IHTA84/S240(2) does not apply (as the tax attributable to the value of the undisclosed asset cannot have been paid in accordance with the account that was delivered). And for the same reason the time limits in IHTA84/S240(4) & (5) cannot apply.
As an omitted asset does not fall within IHTA84/S240(2), it is the twenty year time limit under IHTA84/S240(7) that applies; so generally, with an undisclosed asset where the loss of tax was not brought about deliberately, the tax may be recovered up to twenty years after the date of death. But in the event that omission, and so the loss of tax, was deliberate, there is no time limit for the recovery of the unpaid tax.