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Where Taxpayers and Advisers Meet

Legal expenses for PI claim post death

Proust99
Posts:1
Joined:Wed Apr 07, 2021 6:08 pm
Legal expenses for PI claim post death

Postby Proust99 » Wed Apr 07, 2021 6:17 pm

Mum died 4.5 years ago in an old person's home. She had minimal assets at her death and no IHT was due. Some years after her death it became apparent that she had suffered multiple assaults both physical and sexual in the home and we employed lawyers and incurred legal fees for advice on claiming for post death compensation. We have now - 4.5 years post death - been awarded a large compensation sum. We assume we must now go back and reopen probate to take these payments into account. Can we deduct the legal expenses we incurred to bring this claim from the compensation before declaring the total sum. As we had no idea of any possibility of a claim at the time of her death will we be excused interest ? Thank you

someone
Posts:692
Joined:Mon Feb 13, 2017 10:09 am

Re: Legal expenses for PI claim post death

Postby someone » Sun Apr 11, 2021 4:44 pm

https://www.taxation.co.uk/articles/2013-08-28-312541-treatment-compensation-iht-purposes-confirmed

From the HMRC newsletter:

The right to pursue a claim can be
valuable whether or not the
individual entitled to make the claim
was aware of this right, provided
that the information was capable of
being known at the relevant date.


I don't know if this means if you didn't know you could make a claim and couldn't have known you could make a claim then you don't have to pay IHT on the compensation payment. But given that you said it was multiple years from death to when you became aware that a claim was possible then it sounds likely that some event postmortem was the key point when "the information was capable of being known" so I think there's at least a chance that this compensation falls outside of IHT.


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