Taxpayers wait ten years for assessments

DELAYS AT the Inland Revenue that have left some people waiting more than 10 years for their inheritance tax claims to be assessed were criticised by MPs yesterday.

A report by the powerful Public Accounts Committee said that although the backlog had been reduced, of 1,900 cases taking more than three years to be assessed, 200 dated back more than a decade.

The Inland Revenue was also warned that by reducing penalties for wrong returns they risked sending out "the wrong signals" about non- compliance.

The committee's chairman, the Conservative MP David Davis, said people with inheritance tax claims had a right to expect a "speedy and efficient" service from the tax man.

"Cases that drag on for years, some for over 10 years, frustrate both the Inland Revenue and the relatives of the deceased. The Revenue should take a firm line where the delay is caused by relatives, but must itself deal with all cases quickly and focus its energy on the areas of greatest risk," he said.

The report examines the action taken by the Inland Revenue to improve its inheritance tax service since a previous report in 1993. The tax, charged at a flat 40 per cent rate on estates worth more than pounds 231,000, raised almost pounds 1.7bn last year.

The committee said in its report: "While we recognise that the department has made significant progress in some areas over the last six years, there remains scope for further improvement."

It praised the reduction in the number of cases waiting three years or more to be assessed (from 16.5 per cent in 1993 to 9.2 per cent last year), and the fact that 82 per cent of cases were now settled within 15 months, up almost 20 per cent.

However, the report continued: "Too many cases are still taking too long to resolve."

The committee called on the Revenue to speed processing and encourage relatives and lawyers to fill in returns on an estate's value and contents more quickly. When the returns are wrongly filled out, through negligence or fraud, penalties can be imposed. However, these can be reduced by up to 95 per cent by the Inland Revenue's "mitigation factors", which the report warned would send out the wrong signals about non-compliance.

The report also criticised the "limited progress" made on improving checks on public access to historic art, buildings or land which owners must allow if they wish to qualify for inheritance tax relief. It urged greater co- operation with heritage agencies and improving the register of privately held items available for public viewing.