HMRC Inheritance Tax Investigations: What Bereaved Families Need to Know

Can HMRC investigate my loved one's estate after they die?

1HMRC does not publish the number of inheritance tax investigations it opens. Figures circulating in the press come from Freedom of Information requests, not from a published statistical series.
2What HMRC does publish: inheritance tax receipts were £8.5 billion in 2025 to 2026, up from £3.5 billion in 2006 to 2007.
3HMRC says it will usually ask the Valuation Office Agency for its own opinion of the value of the deceased's property. That is routine, not a sign of suspicion.
4Section 240 of the Inheritance Tax Act 1984 gives HMRC four years to recover additional tax, six where the loss was careless, and twenty where it was deliberate.
5Penalties turn on behaviour: nothing where reasonable care was taken, up to 30% for a careless error, 70% for a deliberate one, 100% where it was deliberate and concealed.

Yes — HMRC can and does check estates after a death. How often is another matter: HMRC does not publish the number of inheritance tax investigations it opens. The counts that circulate in the press come from Freedom of Information requests made by law firms, not from any official statistical series, so this guide does not repeat them. What HMRC does publish is inheritance tax receipts — £8.5 billion in 2025 to 2026, against £3.5 billion in 2006 to 2007 — and, in its manuals and forms, what it actually looks at. That is what follows.

What is an HMRC inheritance tax investigation?

An HMRC IHT investigation is a formal challenge to the estate return filed by the executor. When you apply for probate on a taxable estate, you complete an IHT400 form declaring all assets, gifts and liabilities. HMRC reviews these returns and, where it suspects the declared value is incorrect, opens an investigation.

Checks range from simple queries — HMRC asking for supporting evidence for a valuation — to full compliance checks where HMRC examines years of financial records. Property valuations go to the Valuation Office Agency as a matter of routine rather than as an escalation. Where you and HMRC cannot agree, the dispute can go to the First-tier Tribunal (Tax Chamber).

Executors are responsible for the accuracy of the IHT400 — HMRC warns that the declaration must confirm that everyone named on it has seen the account and agreed to be bound by the declaration. If HMRC finds errors or omissions, the estate — and potentially the executor personally — can be liable for the unpaid tax, interest and penalties.

How likely is it that my loved one's estate will be investigated?

Nobody outside HMRC can answer this with a number. HMRC carries out risk-based compliance checks and does not publish how many it opens, what proportion of returns they represent, or what makes one return more likely to be picked than another. Anyone who quotes you odds is estimating.

What is certain is that some checking is routine rather than selective. HMRC's IHT400 notes say that once it has returned your probate values and code, “we'll look at form IHT400 in more detail. We may ask you questions to help us understand what you've said on the form and any schedules”, and that for property it “will usually ask the Valuation Office Agency to give us their opinion of the value of the deceased's property”.

The wider context is published. Inheritance tax receipts were £8.5 billion in 2025 to 2026, up from £3.5 billion in 2006 to 2007, with the nil-rate band frozen at £325,000 and the residence nil-rate band at £175,000.

What triggers an HMRC IHT investigation?

HMRC does not rank its reasons, and no official source does either. The areas its own guidance and forms show it examining are these:

Trigger	Why HMRC investigates
Property valuations	HMRC relies on professional advice from the Valuation Office Agency — the Valuation and Lands Agency in Northern Ireland — and says it will usually ask for that opinion. If the VOA cannot accept your figure it will try to agree one with you.
Undisclosed gifts in the 7 years before death	Schedule IHT403 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.
Missing bank accounts	HMRC can cross-reference the estate with HMRC tax records and bank interest data. Undisclosed accounts are a common finding.
Trusts or business interests not declared	Business property relief and trust interests must be accurately reported. Omissions or overclaimed reliefs are frequently challenged.
Overseas assets not included	Where the deceased was a long-term UK resident — from 6 April 2025 the test that replaced domicile, meaning UK residence in at least 10 of the previous 20 tax years — inheritance tax applies to their worldwide estate, and foreign assets go on Schedule IHT417.

What happens if HMRC investigates your loved one's estate?

The process typically begins with a formal letter from HMRC to the executor, explaining what they are querying and what evidence they want to see. This might be:

Your evidence for the value of the property
Bank statements covering the last 7 years
Evidence of gifts and who received them
Business accounts or share valuations
Details of any trusts the deceased was a beneficiary of

At this stage, you should respond promptly and comprehensively. Ignoring HMRC's letters makes things significantly worse.

If HMRC concludes that more IHT is owed, you will receive a formal assessment. Interest runs from the first day of the seventh month after the month in which the person died — so a death on 7 January means interest from 1 August — at the Bank of England base rate plus 4 percentage points, which has been 7.75% since 9 January 2026. Penalties are charged on top:

0% penalty for honest mistakes with no carelessness
Up to 30% for careless errors
Up to 70% for deliberate understatement
Up to 100% for deliberate understatement with concealment

These percentages are applied to the amount of unpaid tax — so on a large estate, penalties can add up to tens of thousands of pounds.

What the rules require of an executor

There is no method for lowering your odds of a check, because the odds are not published. There is a set of things the rules require, and doing them is both the duty and the protection:

Value land and buildings properly. HMRC's IHT400 notes say you are “strongly advised to use a professional valuer” for land and buildings, and IHT405 says that if you have a professional valuation you should enclose a copy. HMRC does not mandate a RICS report; what it wants is the open market value at the date of death, evidenced. If several valuations give a range, the notes say it is “probably best to adopt a value that's somewhere in between”.
Deal with gifts on IHT403. Review the deceased's bank statements for the seven years before death and state the exemption for anything exempt. HMRC tells you to leave off 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.
Check for all accounts. Use the dormant accounts tracing service to identify accounts you may not know about. NS&I and Premium Bonds can also be traced through NS&I's free service.
Report what changes. HMRC's notes put continuing duties on the executor: tell HMRC the final figures as soon as you know them where you used a provisional estimate; tell HMRC if the value of an asset or debt changes so as to affect the tax; and tell HMRC if a liability you deducted is not actually repaid out of the estate.
Keep the records for as long as HMRC can come back. Section 240 of the Inheritance Tax Act 1984 sets the windows, running from the later of the date the tax was paid or became due: four years normally, six where tax was lost carelessly, twenty where it was lost deliberately. Retain all valuations, correspondence and estate accounts.

The 7-year rule on gifts — explained in plain English

Gifts made within 7 years of death are generally included in the taxable estate. The rules work as follows:

Gifts to individuals made more than 7 years before death: outside the estate, no IHT
Gifts made within the 7 years: set against the nil-rate band in the order they were made. Only the part above the available nil-rate band is taxed
Where a gift is taxed and was made between 3 and 7 years before death, taper relief reduces the tax on the gift — not the value of the gift, and not the amount brought into the estate. IHT403 sets both conditions: taper relief is “only available on the tax on gifts that both” have “a combined value that is more than the Inheritance Tax nil rate band available for the estate” and “are made between 3 and 7 years before the date of death”

This is the single most commonly inverted rule in UK inheritance tax writing. If the gifts in the seven years fit inside the nil-rate band there is no tax on any of them, so there is nothing for taper relief to reduce.

This is why executors must look back 7 years, not just at what the deceased owned at the date of death. For a full explanation, see our guide to the 7-year gifting rule.

What to do if HMRC contacts you about the estate

If HMRC writes to you about the estate, the most important things are:

Don't ignore it. A failure to respond makes HMRC assume the worst and can lead to higher penalties.
Respond promptly. HMRC sets deadlines in its letters. If you need more time, write to ask for an extension — they usually grant one if asked in advance.
Correct what is wrong. If you find the account was wrong, tell HMRC. Penalties under Schedule 24 to the Finance Act 2007 turn on behaviour and on the quality of disclosure — an unprompted disclosure attracts the lowest figure in the band, and there is no penalty at all where reasonable care was taken. In England, Wales and Northern Ireland the correcting form is C4; in Scotland it is C4(S).
A solicitor or chartered tax adviser can act for you. They can correspond with HMRC and take a valuation dispute up with the Valuation Office Agency. No official source publishes what that costs, so ask for a quote. Reasonable professional fees for administering the estate are generally payable from the estate.

For general context on IHT and how it works, see our UK inheritance tax guide 2026/27 and the IHT400 form completion guide.