Spouse 1 died in 2004, leaving a will appointing trustees for an NRB discretionary trust.
Trustees were Spouse 2 and family solicitor.
Stated in the will is that spouse 2 inherits remains of spouse 1 estate.
Probate was granted with assets below NRB at the time, being half the value of their property.
Spouse 2 died in 2021 leaving all assets to three children and small fixed amounts to grandchildren. Estimate of current estate value is £950,000.
A trawl of paperwork has resulted in no proof showing any asset transfer to trust. We suspect trust was setup by spouse 1 but no assets transferred. Solicitor for Spouse 2 estate has said that if no proof of asset transfer can be shown, Spouse 1 NRB will be lost on the assumption that it was used after spouse 1 death. RNRB can still be used however.
I have queried why no asset transfer into trust doesn't default to position as if no trust existed and NRB can be used. Answer seems to be that this would be seen by HMRC as attempting to gain a tax advantage.
Therefore burden of proof is either;
1. Prove asset transfer, in which case amount in trust can be used to offset estate value.
2. Prove no asset transfer, in which case we can use 325,000 NRB from Spouse 1.
3. Prove neither, in which case HMRC assumes NRB was used in Spouse 1 estate and is no longer available to offset Spouse 1 estate value.
We are currently in situation 3.
Firstly, I would welcome comments or corrections in my assumptions above, in case I have misunderstood. (Please! I am not legally trained, so any assistance with as simple language as possble would be much appreciated).
Secondly, is it worth persuading solicitor to argue our position with HMRC for leniency because of lack of evidence either way? Would a written statement from Solicitor trustee of Spouse 1 that he signed nor received no paperwork regarding asset transfer be sufficient for proof to HMRC? What would you do in this situation? It's a question of approximately £130,000 in tax.
Many Thanks
AS
- Home
-
Tax News
- Budgets and Autumn Statements
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings & Investments, Pensions & Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations & Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practice and Methods
- Professionals in Practice & Industry
- General
- TaxationWeb
-
Tax Articles
- Budgets and Autumn Statements
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings and Investments, Pensions and Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations & Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practice & Methods
- Professionals in Practice & Industry
- General
- Tax Tips
-
Tax Forum
- Income Tax
- Business Tax
- PAYE and Payroll Taxes, National Insurance, NICs
- Company Taxation
- Savings & Investments, Pensions & Retirement
- Capital Gains Tax, CGT
- Property Taxation
- Inheritance Tax, IHT, Trusts & Estates, Capital Taxes
- Tax Investigations and Enquiries
- VAT & Excise Duties
- Stamp Duty, Stamp Duty Land Tax, SDLT
- International Tax
- HMRC Administration, Practices & Methods
- Professionals in Practice & Industry
- General
- Tax Jobs
- Get in Touch