HM Revenue & Customs is increasing its scrutiny of residential property valuations in inheritance tax (IHT) returns with referrals to the Valuation Office Agency (VOA) rising sharply over the past year.
Research from TWM Solicitors shows HMRC requested VOA input in 14,631 cases in the 12 months to 30 September 2025, up 23.5% from 11,845 a year earlier.
The VOA provides independent property valuations to help HMRC determine how much IHT is due, and the increase in referrals signals a more aggressive approach to challenging estate values.
TWM says the shift reflects HMRC’s growing focus on recovering revenue from underreported or misvalued estates, with lawyers now seeing far more frequent queries than in previous years.
PROPERTY A KEY TARGET
Residential property remains a key target. HMRC data shows it accounted for 46.8% of the total net value of estates in 2022/23, equivalent to £29.5bn.
The rise in scrutiny comes as IHT receipts have climbed by more than 61% since 2020 to £8.3bn, driven by rising house prices and frozen tax thresholds. The nil-rate band has remained at £325,000 since April 2009, pulling more estates into the tax net.
Laura Walkley (main picture, inset), Head of Private Client at TWM Solicitors, says: “HMRC is clearly focusing on property valuations as a significant potential source of revenue. There has been a noticeable shift towards questioning figures submitted in IHT returns, rather than accepting them at face value.”
FINANCIAL CONSEQUENCES
She warns that executors need to take care when reporting property values and adds: “If an executor fails to report a property value properly, there can be financial consequences for the estate such as additional tax and interest to pay – potentially by the executor personally. You are advised to use a proper valuation from a RICS valuer rather than an estimate from a high street estate agent.”
TWM adds that HMRC’s wider use of AI, data matching and other analytics tools is also increasing its ability to identify discrepancies in IHT returns, leading to more frequent investigations.
The trend suggests property valuations are becoming an increasingly important battleground for tax compliance, particularly as fiscal pressures push HMRC to maximise revenue collection.
