This article was published on February 10th, 2016
A tax tribunal has quashed a £5,000 fine for an undeclared income error on a deceased estate calculation. The case came about after two executors failed to declare the correct income received in the deceased person’s final year of life between 6 April 2012 and his death on the 15 Oct 2012.
It was accepted by the HMRC that the error was careless rather than any deliberate attempt to avoid inheritance tax however they failed to query the shortfall of £14,500 until nearly a year after the death by which time the estate had been distributed and they then issued the penalty of £5,060.
The estate was worth £1.5 million and the executors filed a self assessment return covering the period in dispute and payed tax to the revenue totalling £15,332 including a letter saying ‘I will have to presume this is in full and final settlement, as I am now proceeding to finalise and distribute the estate.’
The tribunal agreed that the inheritance tax shortfall was still owed but the penalty was not because of the excessive time taken for HMRC to raise the query and also because the executors error had not been deliberate.
Don’t find yourself in similar circumstances; estate planning can be very complicated with lots of pitfalls which is why it is important to get the right advice. Whatever the estate size, our family solicitors have a comprehensive knowledge of estate planning law and can ensure distribution of legacies runs smoothly, limiting stress at a difficult time.
For more information and advice contact our team of Wills, trusts and estate planning solicitors today. If you would like to learn more about our probate services click here.
Call us now on FREEPHONE 0800 1979 345, or complete our simple enquiry form.