Inheritance Tax Appeals: Challenging An HMRC Notice Of Determination

You buried a parent, sorted the paperwork yourself to save on solicitors' fees, paid what the estate owed, got probate, and shared out what was left. Months later a brown envelope arrives from HMRC. It is headed "Notice of Determination". HMRC has revalued an asset, refused the business or agricultural relief you claimed, or assessed a lifetime gift you thought was safe. The estate's tax bill has just gone up—by thousands, sometimes much more.

The clock on that envelope is 30 days. Interest has been running since long before the letter arrived. And here is the part nobody warns lay executors about: the money may have to come from you. As the personal representative, you can be personally liable for Inheritance Tax on an estate you have already distributed.

This guide is for the executor, the surviving spouse, the trustee, or the person who received a gift that has come back into charge. It explains what the Notice of Determination is, the 30 days appeal deadline, the personal-liability trap, the battlegrounds where these disputes are won and lost, and what to do in the time you have.

What A Notice Of Determination Actually Is

Inheritance Tax does not run on the rules you may have read about elsewhere on this site. There is no self-assessment closure notice, no section 9A enquiry, no section 31 appeal. Inheritance Tax has its own self-contained machinery in Part VIII of the Inheritance Tax Act 1984 (IHTA 1984), and the document that starts a dispute is the Notice of Determination.

Under section 221 IHTA 1984, where it appears to HMRC that a transfer of value has been made—or a claim is made to HMRC—HMRC may give written notice to any person who appears to be the transferor, the claimant, or liable for any of the tax. The notice states the matters HMRC has determined. It is the Inheritance Tax equivalent of an assessment.

Section 221(2) sets out what HMRC can determine: the date of the transfer, the value transferred and the value of the property it is attributable to, who the transferor was, the tax chargeable and who is liable to pay it, and any other relevant matter. Where the facts were stated in an account you delivered and HMRC is satisfied they are correct, the determination follows your figures. Where HMRC is not satisfied, section 221(3) lets it determine the matter "to the best of their judgment"—the Inheritance Tax version of a best-judgment assessment.

Three groups of people receive these notices:

• Personal representatives (executors and administrators) of someone who has died;
• Trustees of a settlement, where a trust charge is in dispute; and
• Donees—people who received a lifetime gift that has fallen back into charge because the giver died within seven years.

The notice itself must, under section 221(4), tell you the time within which and the manner in which you can appeal. Read that panel carefully. Because if you do nothing, section 221(5) makes the determination conclusive against you—subject only to later variation by agreement or on appeal. A determination you ignore becomes the final word on what the estate owes.

The 30-Day Clock

You have 30 days to appeal. Section 222(1) IHTA 1984 gives a person served with a Notice of Determination the right to appeal "within thirty days of the service" by written notice to HMRC specifying the grounds of appeal. This is not the section 31A TMA deadline you may have read about for income tax—it is the Inheritance Tax provision, but the practical effect is the same: 30 days, and the clock starts on the date the notice was served.

Your written appeal must state your grounds. You do not have to win the argument in that first letter, but you do have to identify what you are disputing. A protective appeal—even a short one—stops the determination becoming conclusive while you gather evidence. A workable shape:

Dear Sir or Madam,

Re: Estate of [name of deceased], deceased [date]; HMRC reference [number]

I appeal the Notice of Determination dated [date], served on me as [personal representative / trustee / donee]. The determination [refuses business property relief on the shareholding in X Ltd / refuses agricultural property relief on the farmhouse at Y / revalues the property at Z / treats the gift of [asset] as a chargeable transfer].

Grounds: [for example] the business was not one of wholly or mainly making or holding investments within section 105(3) IHTA 1984, so business property relief is due; the value attributed by HMRC is excessive. Full grounds will follow.

Send the appeal to the HMRC office that issued the notice, using the address and the reference shown on the Notice of Determination itself—section 221(4) requires HMRC to tell you how and where to appeal. If no address is given, HMRC's Inheritance Tax post goes to Inheritance Tax, HM Revenue and Customs, BX9 1HT. Keep proof of sending: a "BX9" postcode is an internal sorting address that ordinary Royal Mail tracking will not confirm, so many people use Special Delivery to have dated evidence the appeal arrived inside the thirty days.

If you have already missed the 30 days, you are into a late-appeal application. The tribunal applies the Martland three-stage test, and it does not grant extensions routinely—see our guide to a late appeal to the tax tribunal. For how to set out grounds properly, see writing grounds of appeal; section 222(1) makes grounds a statutory requirement, not an optional extra.

Inheritance Tax Has Its Own Machinery—Forget The SA Rules

If you or your adviser have handled an income tax or capital gains dispute before, set those rules aside. Inheritance Tax appeals run on section 221 (the determination, which under section 221(5) can be varied by written agreement), section 222 (the 30 days appeal), and sections 223A to 223I (review and notifying the appeal to the tribunal). The review-then-tribunal path in sections 223A to 223D mirrors the section 49 TMA statutory review the site covers elsewhere—the structure is familiar even though the section numbers are different. The one thing that does not carry over is the income tax assumption that appealing pauses the tax: it does not, as we explain below.

The Personal-Liability Trap For Executors

This is the part that catches bereaved families. Under section 200 IHTA 1984, personal representatives are among the people liable for the tax on the death estate. That liability does not vanish when you hand out the money. A personal representative who distributes the estate and then receives a Notice of Determination can be left personally exposed for the extra tax—on cash they no longer hold.

Many practitioners therefore advise personal representatives to obtain clearance from HMRC before distributing, and to retain a reserve against a possible later challenge. Clearance is the modern successor to the old IHT30 certificate of discharge: it confirms HMRC is not seeking further tax on the information it has. But clearance is not a complete shield—it does not cover later-discovered property or fraud, so it is not a substitute for accurate disclosure in the first place.

The point for an executor reading a fresh Notice of Determination is blunt. If you have not yet distributed, the position you take now affects your own exposure. If you have already distributed, you may be relying on recovering the tax from beneficiaries who have spent it. Either way, this is the moment to take advice on your personal position—not just the estate's.

What Changed On 6 April 2026: The £2.5m BPR/APR Cap

There is a reason Inheritance Tax relief disputes are about to become far more common, and far higher-stakes. For decades, business property relief and agricultural property relief could wipe out the Inheritance Tax on a qualifying business or farm entirely—100% relief, no cap. That has now changed.

The reform is in Finance Act 2026, section 65 and Schedule 12, and it took effect for deaths and transfers on or after 6 April 2026. From that date there is a combined £2.5 million allowance of 100% relief across business property relief and agricultural property relief. Qualifying value above £2.5 million gets only 50% relief—an effective Inheritance Tax rate of up to 20% on the excess.

You may have read that the cap was £1 million. That was the figure originally announced at the Autumn Budget on 30 October 2024. After consultation, it was raised to £2.5 million by a December 2025 announcement and that higher figure was the one enacted in Finance Act 2026. The £1 million number is now only history.

A few details matter for anyone whose estate sits near or above the cap:

• The £2.5 million allowance is transferable between spouses and civil partners, so a couple can pass roughly £5 million of relievable property at 100%—on top of their nil-rate bands.
• Trusts get their own £2.5 million allowance, refreshing at each ten-year anniversary charge.
• The allowance is CPI-indexed from 6 April 2031.
• Shares not listed on a recognised stock exchange but traded on a market such as AIM drop from 100% relief to 50%.
• An anti-forestalling rule bites on lifetime gifts made on or after 30 October 2024 where the giver dies on or after 6 April 2026 within the seven-year window—so you cannot escape the cap by having gifted qualifying property between Budget day and the start date.
• Separately, unused pension funds come within the Inheritance Tax net from 6 April 2027.

Why does this matter for an appeal? Because the qualification fights—is the business "wholly or mainly" investment? is the farmhouse "character appropriate"?—now carry double the tax on every pound above £2.5 million. Relief that used to be all-or-nothing at 100% is now all-or-nothing at the margin between 100% and 50%. The case law that decides those questions, set out below, has never been more worth understanding.

This is a statement of what the law now is, not advice on how to plan around it. If you are reading this you are almost certainly appealing a past event, and the cap will apply on its own terms to the date of the death or transfer.

The Battlegrounds: What HMRC Argues And Where You Fight

Inheritance Tax determinations sound technical, but HMRC's challenge almost always falls into one of a handful of recognisable lines. Read your notice against this table, identify which fight you are in, and the relevant section below tells you the law and the leading cases.

Business Property Relief Fights

Business property relief sits in sections 103 to 114 IHTA 1984. The headline question in almost every dispute is whether the business qualifies at all—and that turns on a single, much-litigated subsection.

"Wholly Or Mainly Investment" (s.105(3))

Section 105(3) IHTA 1984 excludes a business that "consists wholly or mainly of one or more of the following … dealing in securities, stocks or shares, land or buildings or making or holding investments." "Wholly or mainly" means more than half. If the business is more than 50% investment, relief is lost entirely.

The leading authority is George & Anor (Executors of Stedman) v IRC [2003] EWCA Civ 1763, a Court of Appeal decision about a caravan park that also ran a shop, club, and services. The court rejected an over-legalistic approach and held that the business must be looked at in the round: relief is excluded only where the business is mainly investment. That benchmark—look at the whole business, not one slice of it—runs through every case that follows.

For mixed estates, the five-factor approach in Farmer (Farmer's Executors) v IRC [1999] STC (SCD) 321 is the practical tool. The Special Commissioners weighed the overall context, the capital employed, the time spent by people running the business, turnover, and profit—no single number decides it. A landed estate with both let property and an in-hand farming business qualified because farming predominated.

Where land is simply let out, HMRC usually wins. In McCall v HMRC [2009] NICA 12, grazing land let under seasonal agistment in Northern Ireland was held to be the holding of an investment—the fencing, water, and gates were the activities of a landowner managing an asset, not an active trade. Relief was refused. McCall is the benchmark for "passive land equals investment".

Furnished holiday lets are the hardest fight of all. In HMRC v Pawson [2013] UKUT 50 (TCC), the Upper Tribunal (Henderson J) reversed the First-tier Tribunal below and held that a single furnished holiday let was mainly an investment—the cleaning, heating, and welcome pack were "unlikely to be material" because they were not enough to prevent the business remaining mainly one of property investment. The Court of Appeal refused permission to appeal. Pawson effectively closed the door on relief for ordinary holiday lets, and it has held firm: in Green v HMRC [2015] UKFTT 334 (TC), five self-catering units still failed, and in Firth v HMRC [2022] UKFTT 219 (TC) a serviced "aparthotel" failed too. More units do not help.

There is one modern holiday-let win, and it shows how high the bar sits. In PRs of Graham v HMRC [2018] UKFTT 306 (TC), four self-contained flats on the Isles of Scilly came with a pool, sauna, games room, bikes, laundry, a personal welcome, and garden produce. The FTT held the services were so exceptional that the business was not mainly investment—it was "at the other end of the spectrum" from Pawson. Relief was allowed. The lesson is sobering: only a genuinely hotel-like level of service rescues a holiday-let claim.

The most important recent decision for an unrepresented appellant is HMRC v Vigne [2018] UKUT 357 (TCC), upholding the First-tier Tribunal below. The Upper Tribunal expressly rejected the idea that a land-based business is presumed to be investment unless the taxpayer proves otherwise. The correct approach is the multi-factorial George assessment with no presumption either way. On the facts, a livery yard providing worming, hay, mucking-out, and health checks was not mainly investment, and relief was allowed. The "no presumption" point is the single most useful thing to quote if HMRC's notice reads as though you have to disprove a starting assumption against you.

For mixed landed estates, the leading authority is HMRC v Brander (Earl of Balfour) [2010] UKUT 300 (TCC), upholding the First-tier Tribunal below. The Whittingehame Estate in East Lothian—around 1,900 acres of in-hand farming together with let cottages and houses—was held to be a single composite business that, looked at in the round, was not mainly investment, so the whole estate qualified. Brander is an Upper Tribunal decision; it is sometimes mis-described as a Supreme Court case, but there is no Supreme Court ruling in Brander. The same multi-factorial reasoning was applied more recently in Cox (Executors of) v HMRC [2020] UKFTT 442 (TC).

The Two-Year Rule And Excepted Assets

Two further requirements catch people who satisfy the trading test. First, the property must have been owned for at least 2 years before the transfer—section 106 IHTA 1984 requires ownership "throughout the two years immediately preceding the transfer". A business bought, started, or inherited too recently does not qualify (subject to replacement-property relaxations in the following sections).

Second, section 112 IHTA 1984 strips out the value of excepted assets—anything that was not used wholly or mainly for the business throughout the relevant period, or required for its future use. This is the "surplus cash on the balance sheet" trap: a large investment portfolio or an unrelated rental property sitting inside an otherwise-trading company does not get relief, even if the company as a whole qualifies.

Agricultural Property Relief Fights

Agricultural property relief lives in sections 115 to 124C IHTA 1984. It is narrower than people expect, and the disputes cluster around three points.

Agricultural Value Only (s.115(3))

This is the silent killer. Relief attaches only to the agricultural value of the property. Section 115(3) IHTA 1984 defines agricultural value as the value the property would have if it were subject to a perpetual covenant prohibiting any non-agricultural use. So if a farmhouse or field carries "hope value" or development potential, relief never covers that premium—only the stripped-down agricultural value.

In the valuation phase of the Antrobus litigation (Antrobus No 2, Lands Tribunal, [2005] RVR 254), the agricultural value of the farmhouse was found to be roughly 70% of its open-market value—a discount of around 30% reflecting the "lifestyle premium" that relief can never reach. A reader who expected relief to cover the whole house value is often surprised by exactly this gap.

The "Character Appropriate" Farmhouse Test

Section 115(2) IHTA 1984 extends agricultural property to cottages, farm buildings, and farmhouses "of a character appropriate to the property". The foundational authority is Antrobus No 1 (Lloyds TSB (PRs of Antrobus) v IRC) [2002] STC (SCD) 468, which framed the test around whether the farmhouse is one from which the farm is genuinely managed, proportionate to the farming operation—put bluntly, whether the property is a house with land, or a farm with a house.

Two cases pull in the taxpayer's favour. In Golding v HMRC [2011] UKFTT 351 (TC), a small, low-profit holding of around 16 acres with an elderly farmer in a run-down farmhouse still qualified: the tribunal accepted that the deceased continued to farm even as his activity reduced with age, and held that low profitability does not disqualify genuine farming. And in Hanson v HMRC [2013] UKUT 224 (TCC), the Upper Tribunal held that the nexus required between farmhouse and land is common occupation, not common ownership—so a farmhouse and the surrounding farmland occupied together can qualify even though they are owned by different family members. Hanson is key for family-farm structures where ownership is split across generations or relatives.

Occupation And Ownership Periods (s.117)

Relief also requires a minimum period, set by section 117 IHTA 1984: either the property was occupied by the transferor for agriculture throughout the 2 years ending with the transfer, or it was owned throughout the 7 years ending with the transfer and occupied for agriculture (by anyone) throughout.

The occupation link can break. In Atkinson v HMRC [2011] UKUT 506 (TCC), a farmer moved into a care home before death; the Upper Tribunal held that his occupation-for-agriculture link to the farm bungalow had been broken once he ceased any meaningful connection, and relief on the dwelling was refused. Contrast Charnley v HMRC [2019] UKFTT 650 (TC): a farmer took in other people's livestock under grazing-style arrangements but also actively husbanded the land and animals. The FTT distinguished McCall—this was farming, not a passive grazing licence—and allowed both agricultural and business relief. The label on the agreement ("grazing licence") was not decisive; the actual activity was.

Gifts, Failed PETs And The Reservation Trap

A large share of Inheritance Tax determinations are not about the death estate at all. They are about lifetime gifts that have come back into charge.

The Seven-Year Rule And Taper

A gift from one individual to another is usually a potentially exempt transfer (PET). Under section 3A IHTA 1984, a PET is treated as exempt when made and becomes chargeable only if the giver dies within 7 years. Survive seven years and there is no Inheritance Tax; die within seven, and the gift is brought back into charge, using up the nil-rate band first.

The taper is the most misunderstood part of all this. Section 7(4) IHTA 1984 reduces the tax on a failed gift on a sliding scale by reference to how long the giver survived after making it:

Here is the trap. Taper reduces the tax, not the value of the gift—and it only bites on the slice of the gift above the nil-rate band. A gift of £325,000 or less, sitting within the nil-rate band, produces no tax to taper in the first place, so taper does nothing for it. Families who assume a gift made "four years ago" is "60% tax-free" are usually wrong: if the gift was within the £325,000 nil-rate band, there was never any tax for the taper to reduce. The death rate itself is 40%.

Gifts With Reservation (FA 1986 s.102)

The classic disaster is the parent who "gives" the family home to the children but carries on living there rent-free. That is caught by section 102 of the Finance Act 1986. Where someone gives property away but either the donee never genuinely takes possession, or the property is not enjoyed "to the entire exclusion … of the donor", it is property subject to a reservation. If the reservation is still in place immediately before death, section 102(3) treats the property as part of the death estate—taxed at death values, as if the gift had never happened. So the house is given away for everything except Inheritance Tax.

The let-out for the family-home case is to pay a full market rent for continued occupation, or to use one of the statutory exceptions. The history matters because it explains why old "have your cake and eat it" schemes no longer work:

• In Ingram v IRC [1998] UKHL 47, Lady Ingram carved a lease out of her house, gave away only the freehold reversion, and kept rent-free occupation under the lease. The House of Lords held there was no reservation—she had given away only what was left after the lease. The scheme worked, and was then closed for land by sections 102A to 102C FA 1986 (inserted in 1999).
• In IRC v Eversden [2003] EWCA Civ 668, a gift into trust giving the spouse an interest in possession escaped the reservation rules and claimed spouse exemption. The Court of Appeal upheld it on the facts—and it was then closed by Finance Act 2003.

The modern question is what counts as a benefit to the giver. In Buzzoni v HMRC [2013] EWCA Civ 1684, a gift of an underlease carried covenants that mirrored the giver's own obligations. The Court of Appeal (Moses LJ) held there was no reservation, because the covenants gave the giver no real benefit or advantage affecting the donees' enjoyment—the benefit "must consist of some advantage … the donor did not enjoy before he made the gift". If HMRC tells you a gift is "caught" by section 102, Buzzoni shows the alleged benefit has to be a genuine, more-than-trivial advantage to the giver, not a technicality.

Which Tribunal Hears Your Fight

Most Inheritance Tax appeals go to the First-tier Tribunal (Tax Chamber)—the same tribunal that hears income tax, VAT, and capital gains disputes. That includes every relief-qualification fight (business and agricultural property relief), every gift-with-reservation argument, and the valuation of shares and other assets. Unquoted-share valuations are negotiated first with HMRC's Shares and Assets Valuation team and, if not agreed, go to the FTT in the ordinary way. There is no special unquoted-share tribunal referral.

There is one exception. A dispute purely about the value of UK land does not go to the FTT. Under section 222(4A) IHTA 1984, where the question is the value of land in the United Kingdom it "shall be determined on a reference to the appropriate tribunal", and section 222(4B) defines that tribunal as the Upper Tribunal (Lands Chamber) in England and Wales (the Lands Tribunal in Scotland and Northern Ireland). So if your fight is "the house is worth less than HMRC says", that valuation issue is heard by the Lands Chamber, not the Tax Chamber—and the Lands Chamber has its own procedure and its own costs regime, which differs from the Tax Chamber's. A relief or gift dispute that also happens to involve land value can end up split between two tribunals.

Whichever tribunal hears it, a valuation dispute is won with a professional valuation of your own, prepared as at the date of death. For land and buildings that means a chartered surveyor's "red book" (RICS) valuation; for unquoted shares, an independent share valuation. HMRC takes its land figures from the Valuation Office Agency and its share figures from its Shares and Assets Valuation team, and most disagreements are negotiated down before any hearing. One feature sets the Lands Chamber apart and is worth weighing before you fight a land value to the end: unlike the Tax Chamber, where each side normally bears its own costs, the Lands Chamber can order the losing party to pay the winner's costs. An executor who loses a land-valuation reference there can be left paying HMRC's costs on top of the extra tax—a risk illustrated by Inheritance Tax valuation references such as Akanwo v HMRC [2018] UKUT 113 (LC) and Palliser v HMRC [2018] UKUT 71 (LC). That makes getting the valuation evidence right early, and settling a weak valuation case rather than running it to a hearing, all the more important.

For the mechanics of getting an appeal to the FTT, see how to appeal to the tax tribunal. For onward appeals, see after your tax tribunal decision and the Upper Tribunal appeal guide—remembering that for a land-value dispute the Lands Chamber is where you start, not where you escalate.

Penalties And Interest

Two Penalty Regimes

Inheritance Tax penalties come from two different places, and which one you are facing depends on what went wrong.

For inaccuracies—the usual fight, where HMRC says a value or a relief claim in your account was wrong—the modern regime is Schedule 24 to the Finance Act 2007. The penalty depends on behaviour: careless (up to 30%), deliberate (up to 70%), deliberate and concealed (up to 100%), reduced for the quality of disclosure. This is the same regime the site covers in HMRC penalties explained and reducing HMRC penalties. Personal representatives who relied on a reputable valuer or solicitor and disclosed the basis of their figures have a reasonable-care argument against a careless penalty. If HMRC goes further and alleges a deliberately undervalued account, the subjective intent test in Tooth becomes relevant—and longer time limits open up.

For procedural failures—not delivering an account, delivering it late, or failing to notify—the Inheritance Tax-specific regime in sections 245 to 253 IHTA 1984 applies. Section 245 IHTA 1984 imposes a penalty for failing to deliver an account, with a further daily penalty once proceedings begin, capped by reference to the tax. The simple rule of thumb: a late but accurate account is a section 245 problem; an on-time but undervalued account is a Schedule 24 problem. A reasonable excuse for the lateness can defeat a section 245 penalty—the same defence the site covers in what is a reasonable excuse.

Interest Never Stops

The single most important thing to understand about an Inheritance Tax appeal is that appealing does not stop interest. Under section 233 IHTA 1984, interest on unpaid tax on a death runs from the due date—the end of the sixth month after death—regardless of whether you are disputing the tax. The rate is the standard HMRC late-payment rate of 7.75%; the mechanics are the same as in our interest on unpaid tax guide.

There is no Inheritance Tax equivalent of the section 55 TMA postponement that pauses income tax during an appeal. Interest is simply the running cost of being wrong. That leaves you with a choice: leave the disputed tax unpaid and let interest accrue (which you recover if you win), or pay the disputed tax now to stop the interest clock and reclaim it with repayment interest if you win. The downside of paying is that repayment interest is lower than late-payment interest (currently 2.75% against 7.75%, a five-point gap), and you may not get the money back quickly. Neither option is "right"—they trade interest cost against cash flow, and the better choice depends on the size of the dispute and how confident you are.

It helps to see how these pieces stack up. Suppose HMRC refuses business property relief on a shareholding worth £400,000. That is roughly £160,000 of extra Inheritance Tax at the 40% death rate. Interest at 7.75% has been running on that sum since end of the sixth month after death, and if HMRC also treats the relief claim as careless it can add a Schedule 24 penalty of up to 30%—another £48,000. A single refused relief claim can therefore turn into well over £200,000 once tax, interest, and a penalty are added together. That is why the grounds, the deadline, and the pay-now-or-let-it-accrue decision all matter from day one.

Deadlines, Accounts And Paying The Tax

Inheritance Tax has a quirk that ambushes lay executors: the tax is due before the account is.

• Paying the tax. Section 226 IHTA 1984 makes the tax on a death due by end of the sixth month after death. Interest under section 233 runs from that date.
• Delivering the account. Section 216 IHTA 1984 gives personal representatives 12 months from the end of the month of death to deliver the account (the IHT400, with schedules; lifetime transfers and trust charges use the IHT100). Personal representatives must account not only for everything in the estate at death but also for property attributable to chargeable transfers in the seven years before death—so you have to hunt down the deceased's lifetime gifts.

Read those two dates together: payment falls due at six months, but you have twelve months to file. It is entirely possible to owe interest on tax before you have even submitted the account. This is one of the most common ways grieving executors fall behind without realising it.

Some of the tax can be spread. Section 227 IHTA 1984 allows tax on qualifying property—land, a business, controlling shareholdings, and certain unquoted shares—to be paid in ten equal yearly instalments. On business and agricultural property the instalments are interest-free, and the Finance Act 2026 reforms extend that interest-free instalment option more widely to relievable property.

Finally, not every estate has to file. For deaths on or after 1 January 2022, low-value and exempt excepted estates need no Inheritance Tax account—the information goes on the probate application instead, and the old IHT205 has been withdrawn for those deaths. But "excepted" is not a guarantee: if HMRC later finds the estate was not in fact excepted (an undeclared lifetime gift, an asset valued too low), a Notice of Determination can still land on an executor who reasonably believed there was nothing to file.

How The Appeal Actually Works

Once your appeal is in, you have the same three broad routes as any tax dispute.

Request or accept a review. Sections 223A to 223C IHTA 1984 let you ask HMRC for a review by a different officer, or accept HMRC's offer of one. A review is free, takes around 45 days, and does not stop you going to the tribunal afterwards. It works best for clean legal points—does the business fall within section 105(3)? was the section 117 occupation period met?—where a fresh pair of eyes can apply settled law to agreed facts. The structure mirrors the HMRC internal review regime covered elsewhere on the site.

Go straight to the tribunal. You can skip the review and notify the appeal to the First-tier Tribunal (or, for a UK-land valuation, the Lands Chamber). This is usually the better route for fact-heavy disputes—was the holiday-let service "exceptional"? was the farmhouse genuinely a working farmhouse?—where evidence and witnesses decide the outcome. There is no fee, and cases take typically 6-12 months. The evidence you assemble—of trading activity, of farming, of services provided—is what wins these cases, so see preparing for your tax tribunal hearing.

Settle by agreement. A determination can be resolved by written agreement between you and HMRC: section 221(5) IHTA 1984 makes a determination conclusive "subject to any variation by agreement in writing or on appeal", so an agreed figure is binding without a hearing. This is the practical Inheritance Tax counterpart of the section 54 TMA agreement covered in settling your tax tribunal case. Many relief and valuation disputes settle somewhere between the two opening positions once the evidence is on the table.

Most Inheritance Tax relief disputes are allocated to the Standard or Complex track at the FTT; the tribunal tracks and costs guide explains what that means, including the cost-shifting risk in the Complex track. Around 45% of tribunal appellants represent themselves, so none of this is reserved for people with lawyers.

A separate point, outside the tribunal's remit: if you believe an adviser or solicitor caused the problem—mis-valued an asset, missed a relief condition, set up a scheme that no longer works—that is a professional-negligence question with its own limitation clock running independently of the tax appeal. It sits outside this guide, but it is worth flagging to a solicitor early so the option is not lost.

Six Things To Do Now

1. Diarise the 30 days deadline. Note the date the Notice of Determination was served and count thirty days. Do this before anything else—if you miss it, the determination becomes conclusive under section 221(5) unless the tribunal grants a late appeal.

2. File a protective appeal in writing. Identify the notice by date, say you appeal, and state outline grounds (section 222(1) requires grounds). Full grounds can follow. Keep proof of sending.

3. Identify which battleground you are in. Read the notice against the decoder table above. Is HMRC refusing business relief on a "mainly investment" basis, restricting agricultural relief, challenging a value, or taxing a failed gift? Each fight needs different evidence.

4. Gather the activity evidence. For a relief dispute, this is what decides it: accounts, the time people spent running the business or farm, services provided, board or farm records, photographs, correspondence. Vigne, Graham, and Charnley were won on evidence of genuine activity.

5. Take advice on your personal exposure before distributing anything further. Personal representatives can be personally liable under section 200. Many practitioners advise obtaining clearance and retaining a reserve while a determination is live; clearance does not cover later-discovered property or fraud.

6. Decide what to do about interest. Interest under section 233 runs at 7.75% regardless of the appeal and there is no automatic postponement. Weigh paying the disputed tax now to stop the clock (recoverable with lower repayment interest if you win) against letting it accrue.

Key Legislation And Resources

Legislation

• Inheritance Tax Act 1984 — the governing statute (Part VIII covers administration, appeals, penalties)
• Section 221, IHTA 1984 — Notice of Determination
• Section 222, IHTA 1984 — 30-day appeal; land-value referral to the Lands Chamber (s.222(4A)/(4B))
• Section 221(5), IHTA 1984 — a determination is conclusive subject to variation by written agreement or on appeal
• Sections 223A–223I, IHTA 1984 — review and notifying the appeal to the tribunal
• Section 105, IHTA 1984 — relevant business property; the s.105(3) investment exclusion
• Section 106, IHTA 1984 — two-year ownership rule
• Section 112, IHTA 1984 — excepted assets
• Section 115, IHTA 1984 — agricultural property; agricultural value; "character appropriate"
• Section 117, IHTA 1984 — minimum occupation and ownership periods
• Section 3A, IHTA 1984 — potentially exempt transfers
• Section 7, IHTA 1984 — rates and taper relief
• Section 102, Finance Act 1986 — gifts with reservation of benefit
• Section 216, IHTA 1984 — delivery of accounts (12 months)
• Section 226, IHTA 1984 — payment of tax (end of the sixth month)
• Section 227, IHTA 1984 — payment by ten yearly instalments
• Section 233, IHTA 1984 — interest on unpaid tax
• Section 245, IHTA 1984 — penalty for failing to deliver an account
• Schedule 24, FA 2007 — inaccuracy penalties
• Finance Act 2026, s.65 and Sch 12 — the £2.5 million BPR/APR allowance (in force 6 April 2026)

Key Cases

• McCall v HMRC [2009] NICA 12 — let grazing land was the holding of an investment; relief refused
• HMRC v Pawson [2013] UKUT 50 (TCC) — single holiday let mainly investment; closed the door on ordinary FHL relief
• Green v HMRC [2015] UKFTT 334 (TC) — five holiday units still mainly investment
• PRs of Graham v HMRC [2018] UKFTT 306 (TC) — exceptional services; the rare holiday-let win
• Firth v HMRC [2022] UKFTT 219 (TC) — serviced aparthotel still mainly investment
• HMRC v Vigne [2018] UKUT 357 (TCC) — no presumption that a land-based business is investment; relief allowed
• HMRC v Brander (Earl of Balfour) [2010] UKUT 300 (TCC) — single composite landed-estate business qualified (Upper Tribunal, not Supreme Court)
• Cox (Executors of) v HMRC [2020] UKFTT 442 (TC) — recent application of the multi-factorial test
• George & Anor (Executors of Stedman) v IRC [2003] EWCA Civ 1763 — the "in the round" benchmark for the investment exclusion
• Farmer (Farmer's Executors) v IRC [1999] STC (SCD) 321 — five-factor test for mixed estates
• Golding v HMRC [2011] UKFTT 351 (TC) — small, low-profit farm still qualified for the farmhouse
• Hanson v HMRC [2013] UKUT 224 (TCC) — nexus is common occupation, not common ownership
• Atkinson v HMRC [2011] UKUT 506 (TCC) — occupation link broken when the farmer moved to a care home
• Charnley v HMRC [2019] UKFTT 650 (TC) — active husbandry was farming, not a passive grazing licence
• Akanwo v HMRC [2018] UKUT 113 (LC) — Lands Chamber Inheritance Tax property-valuation reference
• Palliser v HMRC [2018] UKUT 71 (LC) — Lands Chamber valuation reference; flags the costs risk of fighting a land value to a hearing
• Antrobus No 1 [2002] STC (SCD) 468 — the "character appropriate" farmhouse test
• Antrobus No 2 [2005] RVR 254 — agricultural value of a farmhouse around 70% of open market
• Ingram v IRC [1998] UKHL 47 — lease-carve-out scheme worked; later closed for land
• IRC v Eversden [2003] EWCA Civ 668 — spouse-interest reservation scheme; later closed by FA 2003
• Buzzoni v HMRC [2013] EWCA Civ 1684 — the modern reservation "benefit must be a real advantage" test

HMRC Guidance

• Inheritance Tax overview
• Business Relief for Inheritance Tax
• Agricultural Relief on Inheritance Tax
• Pay your Inheritance Tax and HMRC interest rates
• Inheritance Tax Manual: business relief and agricultural relief
• Inheritance Tax Manual: gifts with reservation
• Reforms to agricultural property relief and business property relief and Inheritance tax reliefs threshold to rise to £2.5m
• Tax tribunal and Upper Tribunal (Lands Chamber)

On This Site

• Understanding HMRC appeal rights — appeal-rights overview (Inheritance Tax uses its own s.221/222 route, not TMA s.31)
• HMRC internal review — the statutory review step (ss.223A–223C mirror s.49 TMA)
• How to appeal to the tax tribunal — filing mechanics and the Lands Chamber split
• Writing grounds of appeal — section 222(1) requires grounds in the appeal notice
• Late appeal to the tax tribunal and Martland v HMRC — if the 30 days slips
• Tribunal tracks and costs — Standard/Complex tracks; the Lands Chamber's own costs regime
• Preparing for your tax tribunal hearing — evidence of trade or farming is decisive
• Settling your tax tribunal case — written agreement under s.221(5) is the Inheritance Tax counterpart of s.54 TMA
• Postponing payment during appeal — but note Inheritance Tax has no s.55-style automatic postponement; interest runs regardless
• Interest on unpaid tax — how s.233 interest works
• HMRC penalties explained and reducing HMRC penalties — Schedule 24 inaccuracy penalties and the reasonable-care defence
• Tooth v HMRC: deliberate inaccuracy — if HMRC alleges a deliberately undervalued account
• Discovery assessments — an analogy only; Inheritance Tax is not the TMA s.29 regime
• After your tax tribunal decision and Upper Tribunal appeal — onward routes
• Tax dispute timeline — where this sits in the wider HMRC journey
• Business Asset Disposal Relief appeals — sibling cluster; trading-versus-investment overlaps the BPR s.105(3) fight

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.