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HMRC internal manual

Inheritance Tax Manual

Disclosure: what to allow for disclosure?

When you consider disclosure the circumstances will vary from

  • a complete and voluntary disclosure, made spontaneously by a taxpayer who has not been challenged and who has no reason to fear early discovery (when an extra 10% (IHTM36183) should be given, making the maximum abatement 30%), to
  • no admission of irregularities even though a tribunal has refused appeals against Notices of Determinations (NODs) (IHTM37001) made by you on the basis of facts discovered by you (when no abatement for disclosure should be given). Between these extremes there will be a variety of circumstances calling for differing degrees of abatement, including

  • a voluntary and complete disclosure by a taxpayer who has some reason to suspect early discovery
  • a full disclosure on challenge
  • a voluntary disclosure which turns out to be partial
  • a partial disclosure on challenge
  • a denial of irregularities on challenge, but disclosures subsequently made. The list is not comprehensive and needs to be taken into account with any other aggravating or mitigating circumstances. If there are no other relevant factors, it may be appropriate to allow 20% for a case within the first two categories and 5% if the disclosure is very belated under the final category.

In cases where you have referred a value to the VOA (IHTM23002) and you have told the taxpayer you have done so and the value is subsequently corrected (perhaps as a result of an early sale), the taxpayer will normally qualify for 20% abatement. The additional 10% will not be due since we have effectively challenged the original valuation.