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Where Taxpayers and Advisers Meet
tax declaration by executor
An Executor inadvertently omits to mention a property which was gifted only 4 years prior to death because he did not know it was owned by the deceased. Probate has now been obtained and the Estate proceeds have been distributed and matters concluded. Who will be responsible for remaining IHT if the taxman requests it? Could it then come from the Executor's personal funds??
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Anthony Nixon
- Posts:260
- Joined:Wed Aug 06, 2008 2:18 pm
This can be an extremely awkward situation. In all probability the Revenue can insist on collecting all the tax from the executor.
If the gift was not itself above the inheritance tax threshold the recipients of the gift may not be liable for any tax directly. It may all be extra tax due on the estate. Even if the recipients are themselves liable for any tax the Revenue are entitled to collect this from the executor if it is not paid by the recipients.
The executor should make the beneficiaries of the estate aware of the situation as soon as possible and ask for money back (before it is spent elsewhere) to pay any extra tax.
If the tax is paid the Revenue will probably be satisfied although they will want interest on the tax if more than six months has passed since the death. But if the Revenue consider the executor should have made more careful enquiries at the start they may also impose a penalty.
If the tax cannot be recovered from the beneficiaries the executor may have to fund tax and interest and any penalty from his own pocket. If there appears to be any risk of this I strongly recommend the executor obtains good professional advice at an early stage.
Please do contact me if you would like to know how my firm could help.
Anthony Nixon ATII
Associate Solicitor
Lester Aldridge Solicitors
Russell House
Oxford Road
BOURNEMOUTH BH8 8EX
Direct Line: + 44 (0)1202 786236
E-mail: anthony.nixon@LA-Law.com
Website: http://www.lesteraldridge.com
If the gift was not itself above the inheritance tax threshold the recipients of the gift may not be liable for any tax directly. It may all be extra tax due on the estate. Even if the recipients are themselves liable for any tax the Revenue are entitled to collect this from the executor if it is not paid by the recipients.
The executor should make the beneficiaries of the estate aware of the situation as soon as possible and ask for money back (before it is spent elsewhere) to pay any extra tax.
If the tax is paid the Revenue will probably be satisfied although they will want interest on the tax if more than six months has passed since the death. But if the Revenue consider the executor should have made more careful enquiries at the start they may also impose a penalty.
If the tax cannot be recovered from the beneficiaries the executor may have to fund tax and interest and any penalty from his own pocket. If there appears to be any risk of this I strongly recommend the executor obtains good professional advice at an early stage.
Please do contact me if you would like to know how my firm could help.
Anthony Nixon ATII
Associate Solicitor
Lester Aldridge Solicitors
Russell House
Oxford Road
BOURNEMOUTH BH8 8EX
Direct Line: + 44 (0)1202 786236
E-mail: anthony.nixon@LA-Law.com
Website: http://www.lesteraldridge.com
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