The Estate Registry, a leading UK provider of end-of-life admin, says an 18% rise in the number of inquiries HMRC has carried out into Inheritance Tax (IHT) submissions during 2025/26 will inevitably cause delays to estate management.
HMRC can open a formal inquiry when it believes there is a risk that an IHT return is incomplete or inaccurate. It gives the tax authority wide powers to ask for documents, valuations, correspondence and to ask for explanations in the event of any perceived anomalies.
Howard Enders, Chief Operating Officer at The Estate Registry which operates bereavement notification services NotifyNOW and Settld, together with InheritNOW, says: “We understand that estate executors have an obligation to pay IHT where it is due, but it is important to remember that an inquiry can lead to months of additional work and stress for bereaved families.
“Many inquiries do not lead to families paying additional tax, but they do impose a significant administrative and financial burden on executors at an already difficult time.”
Historically, Inheritance Tax represented a small component of the work of HMRC because only properties above the £325,000 threshold were eligible. However, rising property prices and the inclusion of unused pension pots, will increase the revenue take, making it a higher priority for the tax authorities.
In addition to formal inquiries, HMRC assessors also referred 4,965 returns to its compliance teams in the 2025/26 tax year. These referrals may progress to a full inquiry, or simply result in minor amendments or no action being taken at all. Just 40% of compliance referrals led to an amendment.
IHT returns must be submitted on paper and processed manually. The lack of digitisation means that HMRC is unable to carry out targeted analytics. As a result, the strike rate is falling, despite the higher number of inquiries and compliance referrals.
Impending changes in 2027 mean the number of estates liable for IHT is set to increase and, as a consequence, the number of compliance issues and inquiries may rise further.
Enders says: “Many disputes arise from the inherent complexity of IHT law, and not from tax evasion. This is likely to lead to prolonged delays to estate administration which, in turn, will place more financial and emotional strain on families.
“Increased digitisation on the part of HMRC would help to expedite this process and that would benefit both the collection of revenue and grieving families as well.”
