When an inheritance tax return is submitted it is initially assessed by a caseworker at HMRC rather than a valuation expert. These caseworkers are tax officers who follow HMRC internal guidance and are trained to spot valuation red flags. If the figures look reasonable and are properly supported, the caseworker will usually accept them and move on. But if something looks wrong the file will then be referred to HMRC’s Shares and Assets Valuation team.
The Shares and Assets Valuation (SAV) team is made up of professionals who may request further information, challenge submitted figures or revalue the assets entirely. That process can take weeks or months and often leads to additional tax being due.
Fortunately, when it comes to personal and household possessions, many of these referrals are avoidable. A properly prepared valuation, carried out by a professional who understands HMRC’s requirements, can give the caseworker the confidence to accept the figures without escalation.
We reviewed the section covering chattels in HMRC’s Inheritance Tax Manual (IHTM21000) to identify the most common issues that cause caseworkers to hesitate.
Red Flag 1: Using the Wrong Kind of Valuation
Executors must declare the open market value at the date of death..
Section 160 of the Inheritance Tax Act 1984 defines this as the price the property might reasonably be expected to fetch if sold on the open market at the relevant time.
The guidance for HMRC caseworkers specifically mentions that insurance valuations, or valuations prepared on any basis other than the terms of Section 160, are not what is required and that “if you are concerned that the value returned does not reflect the open market value ask SAV for advice” IHTM21041
A ring insured for £5,000 but worth only £1,800 at auction must be declared at £1,800. Using the higher insurance value may distort the estate’s total and prompt HMRC to request further details.
Red Flag 2: Professional Valuations That Miss the Mark
You might expect that a letter on headed paper from a professional jeweller or similar would do the job, but unfortunately HMRC are looking for very specific wording.
To put a case handler at ease any professional valuation must:
- Confirm that the value is as at the date of death (and specify this date)
- Confirm that it has been prepared on the basis of the open market value and/or
- Confirm that it was prepared in accordance with Section 160 Inheritance Tax Act 1984
HMRC’s own guidance confirms as much:
“If the taxpayer has provided a professional valuation of household goods, which states that it has been prepared on the basis of the open market value and/or in in the terms of S160, you will usually be able to accept it” IHTM21041
A properly prepared valuation that meets these tests helps ensure your return is waved through without escalation.
Red Flag 3: Check The Insurance Schedule
Where an item is separately insured – for example, a watch or a piece of diamond jewellery – the caseworker will most likely expect to see it itemised on the probate paperwork.
The IHT form for household and personal goods (IHT407) specifically requests that any item of jewellery worth over £1,500 is listed individually.
Caseworkers are trained to spot this. If they know an engagement ring was insured for £7,000 they will expect to see an engagement ring listed separately on the IHT paperwork, albeit with a lower open market value. Otherwise you must be able to justify why it is worth less than £1,500 (a professional valuation will help here).
Red Flag 4: Sale Prices That Do Not Match the Return
HMRC considers post-death sale prices at auction to be the ultimate evidence of true market value.
If an item declared at £2,000 sells for £8,000 shortly after death, then HMRC could come knocking.
“Generally, sales after the death, particularly those at auction, provide the best evidence of the open market value at the date of sale. The taxpayer or agent may be happy to substitute the sale prices for the original valuations or may argue for an adjustment due to market movement between the dates of death and of sale. You should consult SAV (Chattels) if appropriate.” IHTM21041
If you have consulted a professional then they will be able to more easily explain the outcome using their knowledge of the auction world, taking the pressure off the executor and reassuring HMRC.
Red Flag 5: Jewellery Valued Too Casually
Jewellery is often under-declared, especially when it looks modest or old. As mentioned HMRC expects any item worth more than £1,500 to be listed individually and professionally valued.
Given current gold prices, even small pieces can exceed that threshold. A proper valuation ensures nothing is missed and gives HMRC the detail it expects.
Conclusion: Make It Easy to Say Yes
Most executors want to comply with HMRC rather than cut corners, but vague or poorly supported valuations increase the risk of delay.
By using a professional valuer who understands HMRC’s requirements, you give the caseworker what they need to move the file forward. A report that includes the date of death, references section 160 and lists higher-value items individually can help avoid escalation to the formidable Shares and Assets Valuation team.
At Swift Values our services are designed to meet HMRC’s standards, starting from just £25. That small investment can help keep probate moving and HMRC satisfied.