Liability of a beneficiary of an Estate for tax owing.

[Johnblor]

I received an inheritance just over 2 years ago amounting to 45% of the estate.
Another beneficiary received 45% and Cancer Reseach UK received 10%.
Suddenly the Inland Revenue has come along stating the deceased has underpaid his tax by £180.
As I am 1 of the non charity beneficiaries involved I am happy to pay £90 so the Inland Revenue does not have to go back to Cancer Research UK for their share.
The problem is the other beneficiary emigrated to Australia and has since passed away and I do not know what happened to his estate and he was the executor.
The Inland Revenue has asked me to pay the full £180.
Does anybody know if I am liable for the full £180.
My main concern is if I pay this amount if the Inlnd Revenue discover another underpayment which could be substantial could I be held liable for the full amount of that shortfall?.

John

[woofgang]

so far as I understand it, it is the executor who is responsible if the estate is not correctly administered and the executor is responsible for the whole amount...so who was the executor?

[Johnblor]

The executor was the other beneficiary who has since emigrated to Australia and is now deceased.
The shortfall has only just come up and the executor would not have known about it at the time the estate was distributed,
He was relying on the incorrect figures given to him by the Inland Revenue.

John

[woofgang]

oh dear. My knowledge comes from having been an executor. There are a couple of people on here who have actual legal knowledge, hopefully one of them will see your question. I think they go out to work so may not answer till this evening.

[dzug2]

Whilst the executor is responsible, he does have the right to call on beneficiaries to pay the debt. So in theory the IR can go to the other beneficiary or his executors for the money and then they can ask you for it.

So yes it's simpler if you pay what you owe direct.

I can't see you being responsible for the whole debt though - just 45% of it. If you want to pay the charity's 10% as well, then OK.

[VHG]

Not answering your question but this is where common sense goes out the window.

The person has been dead for 2 years, the tax owing is a paltry £180, yet they are chasing people to pay it. It will probably cost more in administration than the money collected.

Yet Goldman Sachs were recently "let off" paying 10 million pounds by the tax people (as were other companies).

http://www.guardian.c...retires-goldman-sachs

There are also millions of people who work cash in had and pay no tax at all. Pity they cant spend more effort chasing them than honest tax payers who have been dead for 2 years.

[autobagger]

VHG your spot on there.

[MartinBev58]

Hi John

Reading between the lines I think you would find it annoying to pay the £180 but it is not really bothering you.
I think it would be best to get legal advice even though it may not be very cost effective in this case.
Really you want a letter from the Inland Revenue saying this is a full and final settlement and you will not have to pay any more money in respect of the deceased estate.
I do not know of the Inland Revenue will issue you such letter and if it will be legally binding if it did.
I am thinking it may be worth having a word with your Citizens Advice Bureau and they may be able to arrange low cost or free legal advice.
If the outcome is you are only liable for 45% I would send Cancer Research UK a cheque for £9 or £18 ( gift aid it ) depending if you just want to cover the other beneficiary's 10% and send a copy of your letters from the Inland Revenue so they can pay the charity can pay the money to the Inland Revenue.
I am concerned if you pay CRUK's portion direct to the Inland Revenue they may still want another £18 from the charity.
This may run up administration costs to the charity but I think there is a point involved here and it would not be your fault.
The only other possibility is if the Inland Revenue only recovers part of the money from you will the Inland Revenue try to get the full remaining balance from CRUK. I think this would not be good but it may be possible.
If this would be the case I will have to leave it to you on how generous you feel.

Martin

[tonywiltshire]

It is the executors duty to pay IHT due (the nil rate band was £312k for 8/9 & £325K for 9/10 & onwards) HMRC will usually expect payment of IHT, if due, before probate is granted, if more than one executor was appointed, and there is often more than one, the surviving executor would take on the responsibility. It is normal for the other 45% beneficiary to also be the executor; executors do not have to be beneficiaries I state what is usual.

If the correct amount of IHT has not been paid the executor is liable as are the beneficiaries but only up to the estate value.
The choice is now yours to pay the full amount, the amount is described as paltry by others, or argue. I would suggest it is not worth taking advice as the cost of the advice may well be in excess of the amount due.

[Johnblor]

Hi Everyone

I should have made it clear that the unpaid tax related to income tax and not inheritance tax.
The estate value was £285,000 and I got 45%.
As I said I am happy to pay my 45% and the CRUK share but I really think if the Inland Revenue wants the other 45% they should trace the beneficiary's of the executor / other beneficiary estate who had since passed away in Australia.
I realise this may not be cost effective to the Inland Revenue but I would have thought that would have not been my problem.

John

[tonywiltshire]

Thanks John, the income tax must have been owing at the time of the testator’s death and it has taken HMRC over two years to claim it. The same applies, it is the executors duty to pay creditors, your options may be that you can just pay the £180, you can talk to HMRC and explain the situation and ask them to cancel the debt, you can ask them to try to locate the other beneficiary but they may well claim it is outside of their jurisdiction.

[DaveW58]

I am no expert on this matter but I would certainly ask how this £180 is owing and ask to see some evidence.
If the deceased tax affairs were fairly straight forward this should have not have happened with all the modern technology today.
I must however admit my father seemed to be owing tax or having a refund almost every year after he retired.
He worked for 4 different employers in his working life and received 4 pensions plus the state pension and 4 different tax offices were involved with my fathers tax affairs.
When he passed away I got about a £400 refund of tax as he passed away in November 2007.
I sent in the form R27 in February 2008 and got the refund in October 2008.
I have not heard anything since.

Dave