Executors Pay Nearly £14,500 to HMRC after Underestimating Deceased’s Income
May 31, 2018 8:09 am
In 2012 executors of Terence Guy submitted a final income tax return, paid the inheritance tax that they thought was due and closed his estate distributing it amongst his beneficiaries. Then in 2014 HMRC came back with a query on the accuracy of the tax return and concluded that his income had been underestimated. HMRC made a claim against the executors for the undeclared income and interest, which amounted to £14,458. They also imposed a penalty of £5060 for the failure to disclose the income.
The case was heard by the First Tier Tax Tribunal who waived the penalty because there was a long delay in HMRC challenging the tax return and because the executors argued that they would have difficulty getting money back from the beneficiries. The executors were held liable for the tax and and interest and this had to be repaid from their own pockets as the estate had already been distributed.