Perane urges Chancellor and Treasury select committee to launch urgent inquiry
Inheritance experts, Perane, have sounded the alarm on billions of pounds owed to His Majesty’s Revenue and Customs (HMRC) through deceased shareholdings which are slipping under the taxman’s radar.
Perane has spent the last 12 months developing a pioneering deceased share ownership search tool which has now revealed a massive black hole in HMRC’s tax revenues caused by inheritance tax swindlers.
In just one case, uncovered in the last few weeks by Perane, an executor failed to declare hundreds of thousands of pounds worth of shares on an inheritance where property and share assets amounted to three quarters of a million pounds.
Instead of declaring £400,000 worth of shares on an estate valued at £750,000, the executor declared only £149,626 in total– a figure which just happened to fall £374 under the threshold for inheritance tax (IHT). At the time, in 1993, IHT was set at £150,000.
Bruce Cane, CEO of Perane, said: “What we have uncovered is constructive white collar fraud on a black market scale, with shares moving unspotted and undeclared through the generations.
“Perane’s unique data suggests that billions of pounds are being lost to the taxman because executors fail to declare inheritance, in many cases engaging in illegal and deliberate tax evasion.
“Perane has also discovered that a significant number of unscrupulous individuals are avoiding tax using FTSE shareholdings, by failing to declare the transfer of share ownership sometime after a death occurs.”
According to Perane, high levels of fraud are occurring because necessary legal checks are not being conducted, and in some cases because solicitors and professional executors are unwittingly facilitating it.
Cane added: “With shares going undeclared and inheritance tax going unpaid, law-abiding taxpayers, and the country, are being well and truly ripped off often by those with the most money.
“That’s why we have written to the Chancellor urging him to act immediately to stop the shareholding tax-swindlers, and to the Treasury select committee urging them to immediately launch an inquiry into how much money is going missing every year.”
Although HMRC is putting more resources into targeting the estates of wealthy deceased individuals, Perane’s tool could be used to generate tens of millions of pounds more in unpaid taxes from those engaged in evasion, deliberately or otherwise.
Perane’s share search tool looks at historic probates and checks what shareholdings are held by registrar, stock, and value. That data is then matched to the executor. Perane can also spot if the shares are suspected of being transferred to another family member at the registered address.
In another case uncovered by Perane, a non-legal lay executor has so far failed to distribute £143,000 of shares to other family beneficiaries since 2006, instead squirrelling away the money. That means £57,000 of inheritance tax has gone unpaid to HMRC.
In addition, in a small sample of 200 probate cases, Perane located:
- undeclared shareholdings above inheritance tax level where £140,000 was due to HMRC
- a further £150k where the lay executors had not declared the shareholdings and were taking the dividends
Inheritance tax is currently payable at a rate of 40%, paid on the value of any estate above £325,000.
Solicitor Michelle Tongue from Private Client Solicitors, Manchester, said: “When an estate is subject to an inheritance tax liability, the personal representatives must complete a comprehensive form in which they must provide accurate valuations of all assets, including properties.
“HMRC are querying more and more of these forms, and are clearly actively stepping up efforts to recover money from families who incorrectly declare the value of an estate and underpay their inheritance tax bill.”
Perane has found that between 2% and 3% of searches reveal shareholdings that probate searches have failed to uncover during administration, dating back into the 1990s.
Perane’s findings are being provided to HMRC so that collection of outstanding tax can be made from the executors, since the stock is still held and can be easily sold.