What Does an HMRC IHT Compliance Check Letter Mean?

What Is an IHT Compliance Check?

An IHT compliance check is HMRC's formal process for verifying that an Inheritance Tax return — whether a full IHT400 or the figures reported for an excepted estate — is accurate and complete. HMRC has the legal power under the Inheritance Tax Act 1984 and the Finance Act 2008 to open enquiries into IHT returns, request supporting documents, and — where it finds errors — issue amended assessments and charge penalties.

A compliance check begins with a letter from HMRC. It will typically reference a specific aspect of the return — a property valuation, a gift, an allowance claim — and ask you to provide supporting evidence. HMRC's inheritance tax post goes to Inheritance Tax, HM Revenue and Customs, BX9 1HT, but reply to whatever address the letter itself gives.

The tone of the letter is usually formal but not accusatory. HMRC will refer to its powers under specific legislation and set a deadline for your response. Read it carefully — the specific documents or information requested will be listed, often in a numbered schedule.

Compliance Check vs Enquiry vs Formal Investigation

These three terms describe different levels of HMRC scrutiny, and understanding the distinction matters:

• Compliance check (routine): HMRC asks for supporting evidence or clarification on a specific issue in the return. This is the ordinary case — a request for documents, not an accusation.
• Enquiry (formal): A more structured process where HMRC formally opens an enquiry under its statutory powers. The letter will use language such as "I am now opening an enquiry into the IHT account." HMRC has more extensive information-gathering powers and the process takes longer. No official source publishes an average duration, so treat any figure you see quoted as a guess.
• Investigation (serious): Reserved for suspected fraud, deliberate tax evasion, or serious inaccuracies. HMRC's Fraud Investigation Service may be involved. If you receive a letter referring to potential fraud or criminal investigation, take professional advice immediately.

For most executors a compliance check letter means the first of these — a request for supporting evidence. What the letter actually says, and which legislation it cites, is what tells you which one you have.

Common Triggers for a Compliance Check

HMRC does not publish how it selects returns for a check, and no official source ranks the reasons. The areas its guidance and forms show it looking at are these:

• Property values. HMRC's notes say it will “usually ask the Valuation Office Agency to give us their opinion of the value of the deceased's property” — the Valuation and Lands Agency in Northern Ireland. This happens as a matter of course, not only where something looks wrong. See our guide on HMRC querying a property valuation for detailed guidance.
• Provisional estimates and later changes. Where you used an estimate, HMRC's notes say “it's your responsibility to tell us what the final figures are as soon as you know them”, and if an asset or debt value changes in a way that affects the tax, “you must tell us”.
• Undeclared or undervalued gifts. HMRC cross-checks bank records and other data against declared lifetime gifts (PETs and CLTs). Gifts go on Schedule IHT403, which covers gifts made on or after 18 March 1986 — leaving out totals of £3,000 or less in a tax year, amounts of £250 or less, and gifts to a spouse or civil partner covered by the exemption. See our guide on the 7-year gifting rule.
• Residence nil-rate band (RNRB) claims. The RNRB (up to £175,000) has specific qualifying conditions. HMRC checks that the home passed to a direct descendant — a child, grandchild or other lineal descendant, or a spouse or civil partner of one — and how the £2 million taper threshold applies. For taper, the estate is all assets less debts,before deducting exemptions or reliefs.
• Business Property Relief (BPR) or Agricultural Property Relief (APR) claims. These are high-value reliefs that HMRC checks carefully. Qualifying conditions — trading status, ownership period, use — must all be evidenced. For deaths on or after 6 April 2026, 100% relief on the combined value of qualifying agricultural and business property is limited to £2.5 million, with the excess relieved at 50%.
• Jointly owned assets. How joint tenancy and tenancy in common assets are valued and reported is a frequent area of complexity. See our guide on joint bank accounts when one owner dies.
• Inconsistencies between the IHT400 and other records. HMRC can access data from other government departments — DVLA, pension records, Companies House — and will flag inconsistencies.

What the Letter Typically Asks For

HMRC's compliance check letter will usually request some or all of the following, depending on the trigger:

• Property valuation evidence: RICS surveyor report, estate agent valuations (if a formal survey was not obtained), or comparable sales evidence.
• Bank statements: often for the 7 years before death, to verify gift records and identify undeclared transfers.
• Gift records: documentation of all gifts made in the 7 years before death, including recipient details, amounts, and dates.
• Evidence of relief claims: for BPR or APR, trading accounts, land registry entries, farming agreements, or company documents.
• Evidence of RNRB eligibility: confirmation of the direct descendant's identity and the nature of the inheritance (direct inheritance, not via a non-qualifying trust).
• Pension death benefit information: particularly relevant because, from 6 April 2027, most unused pension funds and pension death benefits come within the estate for inheritance tax, with personal representatives — not scheme administrators — liable for reporting and paying the tax. See our guide on pensions and inheritance tax from 2027.
• Life insurance policy details: whether policies are written in trust (and so outside the estate) or not. See our guide on life insurance and the estate.

Your Obligations and Response Deadlines

The letter sets its own response deadline; HMRC does not publish a standard period for inheritance tax compliance letters, so read the date on the letter rather than working to a rule of thumb. Where a formal information notice is issued under Schedule 36 to the Finance Act 2008, you can appeal it in writing within 30 days of receiving it. If you need longer to gather documents, write and say so before the deadline passes. If you do not respond at all, HMRC can:

• Issue a determination of the IHT due on its best estimate.
• Apply to the tribunal for a statutory information notice requiring you to provide documents.
• Charge penalties for failing to comply with an information notice. Under Schedule 36 to the Finance Act 2008 that is a penalty of £300, and then a further penalty of up to £60 for each day the failure continues. There is no penalty where you have a reasonable excuse, and you can appeal a notice in writing within 30 days of receiving it.

If you need more time, telephone the HMRC Inheritance Tax team (0300 123 1072) or write to the address on the letter explaining the position. A short extension (2–4 weeks) is almost always granted for straightforward requests.

How to Prepare a Response

A well-organised response is the fastest route to closing the compliance check. Follow these principles:

1. Read the letter carefully and list precisely what is being asked. Number your responses to match the questions in the letter.
2. Gather documents methodically. Retrieve bank statements, insurance policies, property survey reports, or business accounts as required. Keep originals and send copies only.
3. Be factual and precise. Answer what is asked, clearly and in full. This is not the same as staying quiet about something you have since discovered: HMRC's IHT400 notes put a positive duty on the executor to report a change that affects the tax, a final figure that replaces a provisional estimate, and a liability you deducted that is not actually repaid out of the estate.
4. Acknowledge any genuine errors promptly. If the compliance check reveals that you made an honest mistake — an incorrect property value, a missed gift — correct it straightaway. HMRC treats voluntary disclosure of errors more leniently than errors discovered through investigation.
5. Keep full copies of everything you send. Use recorded delivery if sending hard copies. Retain copies of all correspondence permanently.

For a detailed step-by-step on writing the response letter, see our guide on how to respond to an HMRC probate query.

Where a Check Gets Technical

Many compliance checks are a request for documents the executor already has. Some turn on questions where the rules are genuinely intricate:

• Business Relief and Agricultural Relief, including the £2.5 million allowance for deaths on or after 6 April 2026.
• The RNRB taper, which is worked out on the estate before exemptions and reliefs.
• Discretionary and other trusts, and gifts with reservation.
• Foreign assets, and whether the deceased was a long-term UK resident.
• Any letter that refers to deliberate errors, fraud, or a criminal investigation.

A chartered tax adviser or probate solicitor can correspond with HMRC on your behalf and take a valuation dispute up with the Valuation Office Agency. No official source publishes what that costs, so ask for a quote before instructing anyone. Reasonable professional fees for administering the estate are generally payable from the estate.

If you want to understand whether doing probate yourself was the right call in your situation, see our guide on DIY probate vs using a solicitor.

Penalties: What HMRC Can Charge

HMRC's penalty regime for IHT errors is based on the behaviour that led to the error, not just its size:

• Reasonable care (no penalty): If you took reasonable steps to get the return right — obtained professional valuations, declared all assets you were aware of — and an error arose despite this, HMRC should not charge a penalty. Errors of judgment, not negligence, attract no penalty.
• Careless error (up to 30%): If you failed to take reasonable care — used an informal valuation rather than an RICS report for a high-value property, failed to check whether gifts had been made — HMRC can charge up to 30% of the lost tax. This is the most common penalty category.
• Deliberate error (70–100%): If HMRC concludes an error was deliberate — knowingly understating an asset value, omitting a known gift — penalties can reach 70% of the lost tax for a deliberate error, or 100% for a deliberate and concealed error.

Penalties are reduced for voluntary disclosure and co-operation. An executor who promptly corrects an error and co-operates fully will receive a substantially reduced penalty compared to one who delays or provides misleading information.

Interest on Unpaid IHT

Where a compliance check reveals that additional IHT was due, HMRC charges interest from the date the tax was originally payable to the date of payment. HMRC's IHT400 notes give that start date precisely: “The law says that we must charge interest from the first day of the seventh month after the month in which the person died.” A death on 7 January means interest from 1 August.

Since 6 April 2025 the late payment rate has been the Bank of England base rate plus 4 percentage points. It has been 7.75% since 9 January 2026. It moves whenever the base rate moves, so check HMRC's rates page rather than relying on a figure quoted anywhere else, including here.

For broader context on how IHT timing and interest interact, see our guide to probate delays and IHT interest.

The Settlement Process

Once HMRC has reviewed your response, one of three outcomes follows:

1. Compliance check closed. HMRC accepts your evidence and confirms the original return was correct. No additional tax or interest is due. You will receive a closure letter.
2. Amended assessment agreed. HMRC and you agree that additional IHT is due (because a value has been revised or an error corrected). HMRC issues a revised calculation. You pay the additional tax plus interest. The case closes.
3. Dispute continues. You and HMRC cannot agree on the correct value or the application of a relief. The case proceeds to the First-tier Tribunal (Tax Chamber) for independent determination. This is relatively rare — most cases settle by agreement at stage one or two.

Frequently Asked Questions

Does receiving a compliance check mean I did something wrong?

Not necessarily. HMRC's own notes describe looking at the IHT400 in more detail after the grant stage as normal, and say it “may ask you questions to help us understand what you've said on the form and any schedules”. A check can end with the original return confirmed and no further tax due.

Can probate be granted while a compliance check is ongoing?

Usually. A compliance check that starts after the grant does not disturb it. But you cannot apply in the first place until HMRC has sent you its unique code confirming enough tax has been paid — since 18 January 2024 that code has replaced the IHT421 probate summary for applicants in England and Wales. IHT421 is still used in Northern Ireland, and form C1, ‘Inventory’, in Scotland. See our guide on probate delayed by HMRC.

What happens if the estate has already been distributed?

If a compliance check reveals that additional IHT was due and the estate has already been distributed to beneficiaries, the executor is personally liable to pay the additional tax. This is one reason why executors should retain estate funds until HMRC has confirmed the IHT account is closed. See our guide on executor personal liability.

How long does an IHT compliance check take?

HMRC does not publish average timescales for inheritance tax compliance checks, so no honest figure can be given here. What is within your control is the response: HMRC's letter sets a deadline, and a valuation dispute runs until the Valuation Office Agency and you agree a figure — or, if you cannot, until the tribunal decides.

Can I appeal if HMRC decides I owe more tax?

Yes. You have 30 days from HMRC's decision to appeal to the First-tier Tribunal (Tax Chamber). You can also request a statutory review by HMRC's review team before proceeding to tribunal. Most appeals settle by agreement before a tribunal hearing.

Related Guides

• HMRC Queried My Property Valuation: What to Do
• How to Respond to an HMRC Probate Query
• IHT400 Form Guide
• Inheritance Tax Basics
• Probate Delays and IHT Interest
• Paying IHT Before Probate
• Executor Personal Liability
• Complete UK Probate Guide 2026