A warning to executors and beneficiaries!

In order to gain access to a deceased person’s assets it is usually necessary for the executors to file with HM Revenue & Customs (HMRC) a return recording the nature and value of assets and liabilities existing at the date of death, as well as details of most substantial gifts made within the preceding 7 years.

Failure to disclose these details, or even negligence in investigating these matters can expose the executors to penalties, as well as interest due on any outstanding Inheritance Tax (IHT), under paragraph 1A of Schedule 24 to the Finance Act 2007.

Earlier this year a beneficiary was personally fined for failing to disclose to the executors of his late father’s Will relevant information which would have increased the IHT liability. HMRC discovered that shortly before his death the deceased had transferred a substantial sum of money to his son, who did not report this to the executors when enquiries were made of him.

This resulted in HMRC claiming an additional £47,000 in IHT and the son was initially fined over £113,000 although HMRC later reduced this to over £87,000. He lodged an appeal against the penalty but the appeal was dismissed by the Tribunal and the penalty was deducted from his entitlement under the Will.

This case is reported in detail in Hutchings v HMRC, 2015 UKFTT 9 TC.

If you have any queries regarding the issues referred to in this article please contact our Private Client Department.

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