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HMRC internal manual

Inheritance Tax Manual

Dealing with taxpayer's replies: do not make assumptions

This is particularly important when the taxpayer or agent has only provided limited information or general comments in answer to your enquiries, believing that is sufficient for our purposes. You should check that you have established all the relevant facts and that there are no gaps in your knowledge, which you have ‘filled’ in yourself. Your assumptions may or may not be right and you need to be sure of your facts if you believe it warrants seeking a penalty.


When asked how the personal representatives arrived at a value for the deceased’s house, not having employed a professional valuer, the response from the agent might be that the personal representatives just simply used their own knowledge of prices other properties were fetching and had spoken to a friend.

On the basis of that evidence alone you might conclude that those were not the actions of a careful and prudent person making the fullest enquiries reasonably practicable to establish the open market value of the property and, as the next step, you might prematurely seek a penalty.

However, further enquiry of the agent to establish just what they meant by the personal representatives own knowledge and who was the friend might have revealed that the personal representatives owned their own residential property letting company in the same area. As such they would be regularly involved in the local housing market and would have a good knowledge of property prices. The friend was a local estate agent and surveyor. Given these circumstances the personal representatives had clearly acted carefully and reasonably.