Mistake in Inheritance Tax

Kilmaley01

Hi, I am reasonably new to the site so if this is in the wrong place I apologise and please let me know where I should post?

Towards the end of last year, we were one of 28 benificaries of a will. We received just over £20k which cleared almost all our debts.

This week we have had a letter from the solictors saying they had recently received an Inheritance Tax assesment from HMRC in relation to that estate. They say they contacted HMRC re this as it was their understanding that all I tax had been paid. Unfortunately they say that although they advised the Distridct Valuer that the property had been sold this info was not passed on to HMRC and the I tax was not paid in full. They go on to say that this was not picked up by them at the time of completing the administration of the Estate and apologise for their oversight!!

They then say they now require to pay I Tax of over £64k. And they need to pay it by 10th July!! The enclose an amended account and now want from us £4,170 by this date!

We dont have this money anymore. My question is, does anyone know if we have any rights regarding this. Is there anything we can do.

My sister inlaw inherited far more and they are asking her for £36k! She has spent a lot of the money doing up her house and invested the rest where she cannot get at it.

We are at our wits end as to what to do.

Any help would be gratefully appreciated!

Thanks in advance and hope!!

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lincroft1710

It is usually the executor's duty to sort out IT, not beneficiaries'. Solicitors are at fault but if they can't pay it, then it will fall to beneficiaries to pay. Copied following relevant bit from HMRC website:

When a beneficiary or a 'donee' has to pay Inheritance Tax


If for some reason the executor or the trustees can’t pay the Inheritance Tax, the beneficiaries or 'donees' (recipients of gifts made during a person's lifetime) may have to pay it. A beneficiary or donee only has to pay Inheritance Tax in this case if:

• they receive a share of an estate after a death

You will have to repay this money as clearly at least you and SIL received more money than was due to you as the estate wasn't as large as first thought. Suggest you both contact solicitors and explain respective circumstances.

Kilmaley01

All 28 beneficiaries have to repay money.....surely 8 months after the admisitration, the solicitors are liable for something? It's their mistake - and they have admitted that in their letter when saying "apologise for this oversight"?

lincroft1710

There is no argument the solicitors are responsible for your and other 27 beneficiaries' predicament. They may compensate the estate by a token amount, but I'm not optimistic, and they certainly won't pay the whole £64K out of their own funds.

At the moment you've got to work with solicitors and HMRC to sort out payment of the £64K. If you and/or other beneficiaries believe solicitors should be liable for whole amount then you would have to start an action against them.

luiccia

lincroft1710 wrote: »

but I'm not optimistic

Why not? Isn't indemnity insurance for situations like this?

lincroft1710

I expect solicitors would have indemnity insurance but would it pay out? I don't suppose it's a unique case, but hopefully rarely happens. All beneficiaries have been overpaid, so in theory should pay back this money. It's like your employer overpays you one month, wants it back, but you've spent it - alright they pay you less next month.

OP and SIL have spent/tied up their overpayment, but perhaps other beneficiaries haven't. None of the beneficiaries have "lost" any of their inheritance, they have just been overpaid. The problem is HMRC want what is owed to them in 1 week's time and if solicitor doesn't pay, their website suggests they may chase beneficiaries for the money.

It seems as if all beneficiaries need to get together, but this may not be practical. But OP needs to contact the solicitor ASAP.

luiccia

lincroft1710 wrote: »

I expect solicitors would have indemnity insurance but would it pay out?

Why else have it?

It seems as if all beneficiaries need to get together,

Some coordination is certainly required.

But OP needs to contact the solicitor ASAP.

They are hardly unbiased and have already made their preference known.
I think OP needs instead to contact someone impartial like the legal complaints service on 0845 608 6565 for advice.

SeniorSam

gromit2303 wrote: »

Hi, I am reasonably new to the site so if this is in the wrong place I apologise and please let me know where I should post?

Towards the end of last year, we were one of 28 benificaries of a will. We received just over £20k which cleared almost all our debts.

This week we have had a letter from the solictors saying they had recently received an Inheritance Tax assesment from HMRC in relation to that estate. They say they contacted HMRC re this as it was their understanding that all I tax had been paid. Unfortunately they say that although they advised the Distridct Valuer that the property had been sold this info was not passed on to HMRC and the I tax was not paid in full. They go on to say that this was not picked up by them at the time of completing the administration of the Estate and apologise for their oversight!!

They then say they now require to pay I Tax of over £64k. And they need to pay it by 10th July!! The enclose an amended account and now want from us £4,170 by this date!

We dont have this money anymore. My question is, does anyone know if we have any rights regarding this. Is there anything we can do.

My sister inlaw inherited far more and they are asking her for £36k! She has spent a lot of the money doing up her house and invested the rest where she cannot get at it.

We are at our wits end as to what to do.

Any help would be gratefully appreciated!

Thanks in advance and hope!!

Sory to hear the news that the solicitors have made an error. I would certainly try to see compensation for their error and they will be insured for any loss so it would not cost then a penny if their insurance paid up. Perhaps you should mention to the solicitor that you will seek guidance from the Law Society? .......... they would not like that to happen as it would open up an investigation of the way they do business.

Another point which may or may not be relevant as the circumstances of death are not clear, but a Will can be changed within 2 years of death by Deed of Variation and this is often done to improve matters. All beneficiaries need to agree to this but there is no point in persuing a change unless the tax position can be improved.

Did the solicitors recommend that advice should be sought by Independent Financial Advisers who may be able to help with strategy and planning? ......... or was one involved?

Just a few straws to clutch at that may or may not help.

Good Luck

Sam

luiccia

SeniorSam wrote: »

so it would not cost then a penny if their insurance paid up.

Other than increased premiums hence their reticence to submit a claim maybe?

sloughflint

SeniorSam wrote: »

Another point which may or may not be relevant as the circumstances of death are not clear, but a Will can be changed within 2 years of death by Deed of Variation and this is often done to improve matters. All beneficiaries need to agree to this but there is no point in persuing a change unless the tax position can be improved.

You've said this and been corrected on this before. It is only the beneficiaries that lose a benefit that need to agree.

SeniorSam wrote: »

Perhaps you should mention to the solicitor that you will seek guidance from the Law Society?

The SRA would redirect to the LCS who in turn recommend an in house complaint first:

edit: this page may be of interest:
http://www.legalcomplaints.org.uk/faqs.page#negligence

Negligence: What is it?

Negligence is when your solicitor has failed to take reasonable care that a solicitor would normally have taken in similar circumstances. You can also take legal action (including suing your solicitor) if your solicitor has acted in a way that a solicitor would not normally act in similar circumstances.
We might investigate your complaint even if you could also take legal action against your solicitor in the courts.
If we can't help, you might be able to take legal action through the courts or reach a settlement with the solicitor's insurers.
We may refer you to a member (panellist) of our Negligence Panel Scheme, if one is available. The panellist will give you up to one hour's free advice. The panellist will tell you whether they think you have a legal claim for negligence in the courts. (This hour of free advice includes the time it takes the panellist to prepare their advice, including the time they take to read the documents you've provided to support your complaint.)
After the free advice, if you need more help the panellist can charge you for it. You may be able to get legal aid or have legal expenses insurance.
You should know that we can't refer you to a Negligence Panel Scheme member if you are already receiving, or have received, independent legal advice.
There are time limits for making a claim against your solicitor, so you should get independent legal advice as soon as possible. If you are told that you may have a legal claim, you should contact your solicitor and tell them that you plan to make a claim against them.
If your solicitor's insurers get involved, they'll investigate the matter and decide whether it's appropriate to settle your claim. If they decide to settle, they'll also decide how much money to offer you. If they decide not to settle, or you decide not to accept their offer, you'll probably need to go to court. (If you go to court, you may have to pay court costs.)

lincroft1710

Originally Posted by lincroft1710
I expect solicitors would have indemnity insurance but would it pay out?

Why else have it?

It would depend on terms and conditions of policy what insurers will pay out for.

They are hardly unbiased and have already made their preference known

Solicitors have written to all beneficiaries in hope/expectation of having overpaid monies refunded. Until they receive replies to their requests they will be unaware of instances where this is not possible. That is why OP and SIL need to contact solicitors ASAP, so that they are aware there is big problem as over 60% of overpayment cannot immediately be refunded. It will depend upon on solicitors' response as to what OP's and SIL's course of action should be.

From personal dealings with solicitors and insurance companies and dealings of friends and relatives, I am never optimistic of a satisfactory outcome from these two professions. I hope my experiences are not typical as it would mean 50% of solicitors are incompetent or dishonest.

Finally, I would be so happy if solicitors or insurers did something positive in this case.