Cash under the floorboards - inheritance issue

by **db242** on Thu Jan 12, 2012 9:24 pm

Hi,
My father passed away about a year ago, he worked for himself and had a fair bit of cash around, he was investigated by HMRC but they didn't fine him in the end, I think they thought it wasn't too bad, in reality there is a bit of cash around, my mother has now located this but doesn't know what to do, if she fronts up to the revenue will they want 40%? How would they know what to charge over a lifetime and even if there was a case to answer? She wants rid of the hassle but I guess like everyone a 40% bill is a bit steep, also its more than you could lose on a few dinners and would be nice to put in the bank.

Thanks

by **section 44** on Thu Jan 12, 2012 9:28 pm

What's the question?

If there's tax due, it needs to be paid. What were you looking for, a bit of moral support for some tax evasion?

by **db242** on Thu Jan 12, 2012 9:46 pm

I would have thought it simple, where Ive put a question mark theres a question.

by **db242** on Thu Jan 12, 2012 9:47 pm

I would have thought it simple, where Ive put a question mark theres a question.

by **pqtaxation** on Thu Jan 12, 2012 9:52 pm

db242 wrote:Hi,
My father passed away about a year ago .... there is a bit of cash around.... my mother ... doesn't know what to do, if she fronts up to the Revenue will they want 40%?

Does your 40% figure relate to unpaid income tax/NI or inheritance tax?

If the latter, what was value and composition of your father's estate on his IHT account?

by **mullet** on Thu Jan 12, 2012 10:15 pm

She wants rid of the hassle but I guess like everyone a 40% bill is a bit steep, also its more than you could lose on a few dinners and would be nice to put in the bank.

If it is undeclared income on which tax/NIC should have been paid, then 40% is a fair rate.

Materiality is important here.

in reality there is a bit of cash around

How much? £100? £1,000? £10,000?

by **wamstax** on Fri Jan 13, 2012 12:30 am

Ok let's look at the practicalities here.....

If your father's estate exceeded £325K then the cash should be brought to the attention of the executor who would require to file an IHT return.
This would lead to 40% IHT being claimed.

However the bigger question is whether the cash found is of an amount that can easily be explained as saved out of his RETURNED taxable profits? Things like whether your father was in the habit of operating bank accounts would also have to be taken into consideration as if he was and there was capital saved in these accounts HMRC - if and when it was brought to their attention as beign in the estate - would consider whether this cash was the proceeds of crime (tax evasion) and why such cash would be held outside bank accounts by your father. Question would arise as to whether tax evaded cash. If provable - on balance of probabilities - to be tax evaded monies then the estate could be pursued for the tax on the evaded monies (circa 20% if basic rate taxpayer and 40% if higher rate) along with interest on the unpaid tax and a penalty of up to 100% (but not usually over 50%) of the unpaid tax in a civil settlement with the executor.

Does that answer your questions and of course no adviser on this website could ever encourage anyone to not make a disclsoure of evaded tax if it became known that one should be made. In fact a voluntary disclsoure of tax evasion invariably gets you/executor a substantially reduced penalty. Also HMRC have 4 years from the date of death to make any assessments on an executry and can go back 6 years to date of death so that this would be hanging around as being possibly uncovered for some time yet.

My suggestion? - If it looks like tax evasion to you it probably is and you would be advised to get the services of an experienced tax investigation specialist who could advise you on the most appropriate way forward after reviewing matters. Hope that this helps