From: "Peter Crosland" 
Newsgroups: uk.finance uk.legal misc.taxes
Subject: Re: Inheritance Tax or Capital Gains Tax (UK)?
Date: Fri, 10 Nov 2006 16:51:20 -0000

Robert wrote:
> Peter Crosland wrote:
>>>>> Who is right?
>>>>
>>>> You are. IHT is based on the value of the estate at the time of
>>>> death - i.e. *before* you improved the house....
>>
>> Peter Crosland
>
>
> But if the executors sell (within some time frame which escapes me)
> the house for a value that is higher than the probate value then is
> there not an option for Capital Taxes to retrospectively revise the
> probate value to be the actual sale value?

The value for probate is the usually the open market value at the date of 
death. The value can be revised retrospectively if HM Revenue and Customs 
can prove that the value for probate is wrong because of a mistake or fraud. 
Many years ago I helped a friend get the value changed because it had been 
significantly undervalued in an attempt to defraud him as a legatee. The 
Inland Revenue, as it was then, penalised the perpetrator quite hard and in 
fact they were lucky not to be prosecuted as well. HMRC will not alter the 
value just because prices have risen between the date of death and the sale 
date. Obviously the valuation at the date of death has an element of 
conjecture in it but provided a reasonable valuation has taken place then 
there should not be a problem. However, it is wise to remember that the 
HMRC, are not fools and do not appreciate having the Mickey taken.

Peter Crosland