The administration of a deceased person’s estate presents a range of legal and procedural challenges, including the settling of the estate accounts (which may include the preparation of an IHT400 return).

For solicitors, particularly those specialising in probate and estate administration, this responsibility extends beyond legal advice. A key part of this work includes managing complex tax documentation and ensuring that assets are distributed according to any Will, or rules of intestacy.

One of the main priorities for solicitors is the preparation and submission of the IHT400 inheritance tax return. This is required for estates exceeding the nil rate band or involving more intricate arrangements such as trusts or lifetime gifts. In parallel with this is the critical task for the Solicitor of preparing a clear and accurate bill of costs for the legal services rendered throughout the administration process.

For solicitors, ensuring that these professional fees are properly recorded is essential. Engaging an independent legal costs expert ensures that billing reflects the true scope of work undertaken and withstands scrutiny.

What is the IHT400?

The Inheritance Tax Account (IHT400) is the main form used to report inheritance tax to HMRC for estates that are not classed as ‘excepted estates’. In most cases, this applies when the estate is valued over the nil-rate band, which currently stands at £325,000. However, estates under this threshold may still need to submit a completed form if certain conditions apply. For example, where the deceased made significant lifetime gifts or owned assets in trust.

Unlike the simplified IHT205, which is used for smaller, straightforward estates, form IHT400 is extensive. It includes schedules detailing:

• Assets such as property, investments, pensions, and personal possessions
• Debts and liabilities
• Gifts made during the deceased’s lifetime
• Trust interests
• Reliefs and exemptions (e.g., spouse or charity exemption, business or agricultural property relief)

Critically for solicitors, the IHT400 also includes space to report administration expenses, which can include professional fees (legal costs, valuation fees, and accountancy charges). These are deducted from the gross estate before calculating the final tax payable.

Billing for probate

Probate and estate administration work is time-consuming and often highly nuanced. Solicitors engaged in this area spend many hours on tasks such as:

• Locating and valuing assets and liabilities
• Communicating with HMRC
• Preparing and submitting probate applications
• Dealing with banks, financial institutions, and property transactions
• Resolving disputes among beneficiaries
• Drafting estate accounts

These are all chargeable services, but only if they are accurately itemised and verified. If costs are not properly documented, they may be questioned by executors, recipients, or HMRC. This can lead to delays of the administration of the estate and can create unnecessary conflict.

Moreover, it is vital to remember that estate administration costs are recovered from the deceased’s estate. In other words, the legal fees for handling the estate should be paid from the deceased’s assets, not by the beneficiaries or the law firm.

Why use independent legal costing?

Engaging an independent legal costs expert adds significant value in the context of IHT400. An impartial assessment ensures that all time spent, and disbursements incurred are clearly itemised and justified.

For solicitors, instructing a specialist costs provider offers several key advantages:

Objectivity and transparency – Independent costing provides an impartial breakdown of fees, which helps to mitigate probate disputes and provides reassurance to executors and recipients. This is particularly important where there are multiple beneficiaries or contentious relationships within the estate. This is because separately verified bills are less likely to be challenged.

Compliance accuracy – Costs are presented in a format consistent with HMRC and probate requirements, reducing the likelihood of delays or queries. By engaging a specialist costs firm, your practice reduces the risk of non-compliance or adverse scrutiny.

Time efficiency – By outsourcing the preparation of probate bills, legal teams can concentrate on progressing the matter, confident that the billing is in expert hands. At ARC Costs, our team handles the billing process from start to finish, returning a bill that meets all necessary requirements.

Improved recovery – Our expertise ensures that all time that can be recovered is captured, supporting the full recovery of fees reasonably due from the estate.

How can ARC Costs assist?

At ARC Costs, we provide fully independent legal costing services, ensuring that bills are accurate and independently verified. Our team has extensive experience across a range of probate and private client matters. This enables us to reflect the work undertaken with precision, independence and fairness, and we will always advise on the reasonableness of any costs claimed to minimise the likelihood of any disputes to arise.

We are well-versed in cost reporting requirements such that you can accurately reflect legal fees in any IHT400 form and related schedules. Our bills are prepared in accordance with the Civil Procedure Rules such that if there is any challenge from beneficiaries, it will comply with all HMRC expectations and relevant probate guidance, as well as be in a format that justifies all work done on an item by item basis.  This can help to reduce the likelihood of queries or delays in the estate administration process.

Whether you are dealing with a straightforward probate matter or a highly complex estate, ARC Costs can support your legal team in ensuring that all fees are correctly prepared and efficiently recovered.

For assistance with your billing related queries, contact one of the team today. You can email info@arccosts.co.uk, or speak to one of our experts by calling 01204 397302.

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