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Wine investors 'misled' over inheritance tax

Published:  05 October, 2010

Wine collections that are inherited by relatives may attract more tax than families have been led to think.

Despite a widespread belief that wine is valued, for tax purposes, at its original price, accountants have warned that HMRC will assess inheritance tax based on the market value of the wine at the time of death.

UHY Hacker Young says wine investors are "building up huge unexpected tax bills as they have been misled over HMRC's tax treatment of wine".

Partner Mark Giddens said: "Tax law is pretty clear on this point but wine investments are sometimes made in a very salesy and high pressure environment and good salesmen always sound plausible - some may not even know they are giving incorrect tax advice.

"HMRC will be watching closely for this - it is part of a general trend for HMRC to clamp down on inheritance tax evasion."

He added that executors of wills, who are often a relative of the dead person, could face a penalty of up to 100% of the amount of tax lost by HMRC if they file an incorrect inheritance tax return.