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HMRC internal manual

Inheritance Tax Manual

Human Rights and penalties: what you should say in a letter

Almost all our penalty investigations are initiated and conducted by correspondence. When it is clear that penalties are likely to be considered and you write to the taxpayer or their agent (IHTM36156) enclosing a penalty leaflet, IHT 13 you should also include a copy of the Public Funding leaflet (IHTM36411) for each taxpayer and the acting agent.

The conclusion of your letter to the taxpayer or agent you should also include the following

‘I would welcome your co-operation with my enquiries, but the extent to which you co-operate is entirely a matter for the personal representatives. (If writing direct to unrepresented taxpayers and personal representatives please insert - In making your decision you may wish to get help from a professional advisor). As explained there is a possibility my enquiries could result in a penalty being sought and, if that should happen, I will take into account the extent to which the personal representatives have been helpful and have freely and fully volunteered information when I calculate the amount. (Further information on how penalties are abated can be found in IHT13). The personal representatives are entitled to have the question of penalties decided without unreasonable delay. Accordingly, if we are unable to reach agreement within a reasonable time, this office will, either at its own instigation or at their request, take proceedings under section 249 IHTA 1984 as detailed in the IHT13. In that event the information and documents provided may be used to decide the personal representatives’ liability to tax, interest and penalties.’

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)