Latimer Hinks is warning people that they face an inheritance tax headache if records of gifts made to family members are not kept up-to-date and accurate.
Any gift made seven years before a person's death is not subject to inheritance tax, but money given within seven years may be taxed at 40 per cent.
The recent rise in property values has pushed many people's estate value over the Inheritance Tax threshold of £300,000 (2007-2008 tax year). More and more families are now using legitimate gift laws to lessen their IHT bills.
An investigation has been launched by HMRC to find out how people use the seven-year gift rule. Failure to keep precise records of ‘lifetime gifts’ could be extremely costly.
Anne Elliott explains here
For your information - Inheritance Tax Guide