News

Ashes to ashes

  • January 20, 2017
  • By Hunters Law

Many people will have been glad to see the end of 2016.  It seemed that every month brought news of another high profile and well-loved celebrity passing away. Their estates are now being dealt with by their executors, who will no doubt be anxious to carry out their role quietly and away from public view.

Executors of large estates will usually have to submit an Inheritance Tax return to H M Revenue & Customs (‘HMRC’) providing details of all of the deceased’s assets and liabilities.  The executors will also need to be aware of details of all gifts worth more than £250 that the deceased made in the last seven years of their life to anyone other than their spouse or civil partner, which may need to be reported to HMRC.  Executors can find themselves personally liable to pay financial penalties to HMRC if they do not carry out proper enquires to find out about such gifts.

The flip side of this is that if a recipient of a gift is asked by an executor whether they received a gift from the deceased in the last seven years, and the recipient chooses not to disclose the gift to the executor, the recipient can also find themselves liable to pay penalties to HMRC.  In a significant tax tribunal case in 2015, Hutchings v HMRC, a son was held liable to pay a substantial penalty to HMRC when he failed to disclose to his late father’s executors that he had received a large gift from his father six months before his father’s death, which meant that the executors underpaid Inheritance Tax on the estate.  As a result of withholding this information, the son was required to pay almost twice what he would otherwise have paid had he told the executors about the gift in the first place.  However, the executors were not at fault for failing to disclose the lifetime gift because they could show that they had made the appropriate enquires of the son, and others.  From an executor’s point of view, this illustrates the risks involved in carrying out the role of executor, and the need to take care.

For more information, please contact the partner having responsibility for your affairs or any partner in the Private Client Department.

Related News

Jan 25, 2022
Flora Nelmes discusses the steps involved in insuring an unoccupied property following a death in Lawyer Monthly
Jan 17, 2022
Probate Application Fee Increase
Dec 13, 2021
Flora Nelmes says that clients should review their existing wills and consider IHT opportunities with the RNRB to remain fixed until April 2026 in Accountancy Daily
Dec 01, 2021
Flora Nelmes discusses the opportunities to review existing wills and explore IHT, as the residence nil rate band is to remain frozen until April 2026, in Lawyer Monthly
Oct 28, 2021
Doubling of time limit for payment of CGT on residential property transactions
Sep 30, 2021
Hunters recognised in Spear’s 2021 Tax & Trust Advisors Index
Sep 30, 2021
Sunir Watts explains how to make use of inheritance tax gift exemptions in Taxation
Sep 21, 2021
Harriet Murray examines whether a wealth tax is the way to pay for the pandemic in Accountancy Daily
Sep 20, 2021
Louise Garrett discusses the proposed increase in probate fees in WealthBriefing
Sep 17, 2021
Molly Wills discusses Lasting Power of Attorneys in Hamilton George Care

© Hunters Law LLP 2022 | Privacy NoticeLegal & Regulatory | Cookies Policy | Complaints Procedure.

Hunters Law LLP is authorised and regulated by the Solicitors Regulation Authority (number 657218)