HMRC has significantly increased its scrutiny of property valuations submitted in inheritance tax returns, with referrals to the Valuation Office Agency rising by 23.5% in the past year, according to research by TWM Solicitors.
The law firm’s analysis shows that referrals to the VOA increased from 11,845 to 14,631 in the 12 months to 30 September 2025, marking a substantial escalation in the tax authority’s oversight of estate valuations.
Implications for executors
Laura Walkley, Head of Private Client at TWM Solicitors, stated: “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.”
Walkley warned that executors who fail to report property values accurately could face financial consequences, including additional tax, interest payments, and potential personal liability for the estate’s obligations.
The increased scrutiny comes as market uncertainty affects property transactions, making accurate valuations more challenging.
Technology-driven enforcement
TWM Solicitors noted that VOA enquiries about probate valuations, which previously occurred “once or twice every few years” for most legal practices, are now happening with greater frequency. This pattern mirrors broader regulatory trends, with landlords also facing increased scrutiny in other areas of property compliance.
The firm attributes the heightened enforcement activity to several factors, including rising property and asset prices, frozen inheritance tax thresholds bringing more estates into the taxable bracket, and HMRC’s deployment of artificial intelligence and data matching tools to identify inconsistencies in IHT returns.
Market context
The increased focus on property valuations occurs against a backdrop of challenging market conditions, with frozen tax thresholds effectively lowering the bar for inheritance tax liability as property values have risen over recent years.
HMRC’s enhanced use of advanced data analytics has improved its ability to cross-reference property valuations against market data, making discrepancies easier to detect and investigate.