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  • FIRST POST
    • charlie2015
    • By charlie2015 14th Oct 16, 6:34 PM
    • 25Posts
    • 2Thanks
    charlie2015
    C,g tax
    • #1
    • 14th Oct 16, 6:34 PM
    C,g tax 14th Oct 16 at 6:34 PM
    Hi I wonder if anyone can offer any advice when my fathers estate was valued . the executors valued all his assets at £554,000 at probate but sold house for £625,000 . a difference of approx. £70,000 .this you would assume would attract C.G.TAX they are saying their may be no tax at all to pay .they are also saying their accountant , solicitor, and they themselves have over a period of over 2years 7 months despite repeatedly trying . have had no figures or reply from H.M.R.C. they have they say acknowledged their call. does this seem normal to myself it seems a long time to hear no figures or nothing at all. this is an on going problem and has been mentioned before . does anybody have any advice on the above with many thanks.
Page 2
    • Yorkshireman99
    • By Yorkshireman99 16th Oct 16, 12:18 PM
    • 1,616 Posts
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    Yorkshireman99
    hi their was very low amounts in the estate .probably most went on my fathers funeral. could someone please explain what happens at probate do you put in the sum on the forms . and at a later date swear the oath if this is the case why did they not change the figures to the correct amount at the time. with many thanks for advice.
    Originally posted by charlie2015
    The executors are obliged to put as accurate figure as possible for all assets on the probate application. With a property of that value I would expect them to have paid for a professional valuation by a RICS qualified valuer. Estate agents valuations are meaningless for this purpose. HMR&C usually get the District Valuer to check the amount and if need be they will negotiate and agree a value with the executor's valuer.Of course this will cost a few hundred pounds. However this establishes a firm base for any future CGT valuation. This may end up costing them far more than need have been paid. If the estate is liable for extra taxation and, or, penalties then they are personally liable to the beneficiaries. To be brutally frank they deserve to be penalized for for not dealing with their responsibilities properly. They could have taken advice that is readily available but chose not to. They have the opportunity now to try and put things right ASAP and I suggest you urge them to do so. It might be cheaper for them if they get the mess sorted out professionally.
    • charlie2015
    • By charlie2015 16th Oct 16, 4:04 PM
    • 25 Posts
    • 2 Thanks
    charlie2015
    hi Yorkshire 99 are you saying they are responsible for all CGT and penalties ? . because it looks like they would want every body to pay out of the estate fund . could they have put this right when they swore the oath many thanks
    • Yorkshireman99
    • By Yorkshireman99 16th Oct 16, 6:02 PM
    • 1,616 Posts
    • 1,365 Thanks
    Yorkshireman99
    hi Yorkshire 99 are you saying they are responsible for all CGT and penalties ? . because it looks like they would want every body to pay out of the estate fund . could they have put this right when they swore the oath many thanks
    Originally posted by charlie2015
    What I am saying that if, as seems to be the case, they were negligent, then they are personally liable to the estate for any losses incurred because of that negligence. Having said that if they start behaving responsibly and try and unscramble the mess they have created then this will minimize the scale of the losses. The ball really is in their court. Ther extra costs of sorting out are their responsibility.
    • G_M
    • By G_M 17th Oct 16, 11:10 PM
    • 37,065 Posts
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    G_M
    We are going through a similar process, though we have had to pay IHT.

    We used the average of 3 estate agents figures to value the property for IHT and submitted this, with all other assets and exemptions on forms IHT400 and Supplements.

    HMRC referred our property valuation to the District Surveyor, who approved it. HMRC then signed off the tax due, which we paid, and obtained Probate.

    This took 6 months. We spent the winter clearing the house and preparing it for market, and put it on the market in the spring, found a buyer in the summer, and hope to Complete the sale shortly.

    So about 18 months from the date of death. No, as Executers we have not been 'incompetant' and don't need 'our backsides kicking'!

    Assuming all goes well, we will be selling the property for around £100K more than the probate valuation, so Capital Gains Tax will be due.

    We did not 'deliberately under-value' the property, we took the best figure we could, which the DS agreed with. Whether prices have risen, or we've been lucky with this buyer, or we were mistaken with our original figure I don't know, but that does not make us 'personally liable' for anything. The Estate will declare the capital gain at year end and pay what's due.

    If anything, the Beneficiaries should be pleased the property is selling for more than it was valued at 18 months earlier.
    Last edited by G_M; 17-10-2016 at 11:12 PM.
    • MichelleUK
    • By MichelleUK 18th Oct 16, 12:39 AM
    • 132 Posts
    • 97 Thanks
    MichelleUK
    .....The Estate will declare the capital gain at year end and pay what's due.
    Originally posted by G_M
    Quick question - do you mean that you will put the capital gain through as though it is a gain of the estate rather than the beneficiaries?

    The reason that I ask is that if the residue of the estate has been ascertained, HMRC consider that the period of administration has ended and the beneficial ownership of the house lies with the beneficiaries. This effectively means that each residual beneficiary declares their gain and can use their own CGT allowance and rate.

    HMRC's definition of the when an administration ends is quite different to what a layman would think! See helpsheet 282 for more information.

    If there is any doubt, a simple 'deed of appropriation' can be drawn up where the executors basically pass the beneficial ownership to the beneficiaries and then sell the house as bare trustees. Then each beneficiary can use their CGT allowance for their share of the gain.
    • Yorkshireman99
    • By Yorkshireman99 18th Oct 16, 2:51 AM
    • 1,616 Posts
    • 1,365 Thanks
    Yorkshireman99
    We are going through a similar process, though we have had to pay IHT.

    We used the average of 3 estate agents figures to value the property for IHT and submitted this, with all other assets and exemptions on forms IHT400 and Supplements.

    HMRC referred our property valuation to the District Surveyor, who approved it. HMRC then signed off the tax due, which we paid, and obtained Probate.

    This took 6 months. We spent the winter clearing the house and preparing it for market, and put it on the market in the spring, found a buyer in the summer, and hope to Complete the sale shortly.

    So about 18 months from the date of death. No, as Executers we have not been 'incompetant' and don't need 'our backsides kicking'!

    Assuming all goes well, we will be selling the property for around £100K more than the probate valuation, so Capital Gains Tax will be due.

    We did not 'deliberately under-value' the property, we took the best figure we could, which the DS agreed with. Whether prices have risen, or we've been lucky with this buyer, or we were mistaken with our original figure I don't know, but that does not make us 'personally liable' for anything. The Estate will declare the capital gain at year end and pay what's due.

    If anything, the Beneficiaries should be pleased the property is selling for more than it was valued at 18 months earlier.
    Originally posted by G_M
    Without knowing the detail it is hard to say more but executors have a year to deal with everything. To take six moths to clear the house and prepare for sale seems a very long time. In any case this could alll have been done whilst waiting for probate. Nevertheless less your situation seems very different from that of the OP.
    • G_M
    • By G_M 18th Oct 16, 10:19 PM
    • 37,065 Posts
    • 40,997 Thanks
    G_M
    Quick question - do you mean that you will put the capital gain through as though it is a gain of the estate rather than the beneficiaries?

    The reason that I ask is that if the residue of the estate has been ascertained, HMRC consider that the period of administration has ended and the beneficial ownership of the house lies with the beneficiaries. This effectively means that each residual beneficiary declares their gain and can use their own CGT allowance and rate.

    HMRC's definition of the when an administration ends is quite different to what a layman would think! See helpsheet 282 for more information.

    If there is any doubt, a simple 'deed of appropriation' can be drawn up where the executors basically pass the beneficial ownership to the beneficiaries and then sell the house as bare trustees. Then each beneficiary can use their CGT allowance for their share of the gain.
    Originally posted by MichelleUK
    Ah!

    Yes, I meant " put the capital gain through as though it is a gain of the estate rather than the beneficiaries"

    In light of what you say I shall look at passing "the beneficial ownership to the beneficiaries and then sell the house as bare trustees."

    Cheers!

    The fact that the Executers = the Beneficiaries has made things easier.
    • Yorkshireman99
    • By Yorkshireman99 18th Oct 16, 11:18 PM
    • 1,616 Posts
    • 1,365 Thanks
    Yorkshireman99
    Ah!

    Yes, I meant " put the capital gain through as though it is a gain of the estate rather than the beneficiaries"

    In light of what you say I shall look at passing "the beneficial ownership to the beneficiaries and then sell the house as bare trustees."

    Cheers!

    The fact that the Executers = the Beneficiaries has made things easier.
    Originally posted by G_M
    I strongly advise you to get paid for professional advice on exactly how to do this. You can easily come unstuck trying to DIY it.
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