who is liable for the tax?

ross1892

My father died 1st April 2010. Just last week my mother received tax calculations for 08-09,09-10,10-11. In total it says that my father is due the taxman £3020. I phoned them up and they said that they just take the money out of his estate but his estate was settled up last June before the tax demands came in. They also said on the phone that it looks like he will be due to pay extra tax for 06-07 and 07-08.
So my question is who is liable for this money as the estate is already settled and confirmation was done on the 24th June 2010.
My mother is worried sick about having to pay this and any other demands that come through.

Thanks

Ross

System

See the HMRC site for information : HMRC Link

One relevant paragraph says:

When someone dies, the 'personal representative' is responsible for settling the deceased's financial affairs and for dealing with their estate. In England, Wales and Northern Ireland this person is called the 'executor' (if the deceased left a will) or the 'administrator' (if there's no will). In Scotland the term executor is used whether or not there's a will. The term personal representative covers both roles as the responsibilities are the same.

ross1892

yes i realise this but the estate is already settled up long before the tax demands came in. They were addressed to my mother but they were my fathers tax calculations.

System

ross1892 wrote: »

yes i realise this but the estate is already settled up long before the tax demands came in. They were addressed to my mother but they were my fathers tax calculations.

The "executor" is still responsible.

See Additional Link

The above says:

Q. How do I settle the deceased’s tax affairs up to the date of death?
A. Income that the deceased received and capital gains that he or she made for the period up to the date of death are taxed in the normal way. Any student loan liabilities up to the date of death are also dealt with as normal.
Depending on the circumstances, you may have to pay some tax, settle any outstanding student loan repayments, or claim a tax repayment.
Remember, if you

• distribute the estate without settling the tax liabilities, you may have to pay the tax out of your own pocket
• fail to claim a tax repayment due to the estate, you may have to make good the loss to the estate.

System

If the executor did contact HMRC at the time (when the estate was settled) and HMRC failed to act on the information given to them, then you should have a strong case to claim to get the tax demand writen off. (In my opinion)

You would need to write to HMRC giving a record of what info they were given at the time

ross1892

I have just had a call from HMRC and they seem to think because the estate was settled before this tax calculation was done that the debt does not get passed on to my mother. But it is a different department that deals with it and they will be in touch within 3 weeks.

fingers crossed

ILW

It is generally the executors responsibility to check whether the estate has any liabilities before any distribution is made. If this was not done then the executor becomes liable for any outstanding debts. They can ask for the money back from beneficiaries though.

ross1892

but this debt never became knowledge until the last 2-3 weeks 10 months after the estate was settled.

ILW

Were HMRC asked if there may be any tax liability before the estate was settled?

John_Pierpoint

Let me assume that you are writing as "the personal representative" who is responsible for this situation.

It is probably not relevant, as HMRC is a law unto itself, but did you advertise for creditors?

You seem to have pushed the system through very quickly.
Was dad a pensioner?

What sort of tax payer was dad? Was he on a PAYE code? If so what was it? [My notorious uncle "Mr Dog" was on a PAYE "K" code, which set all sorts of bells ringing]. I suppose that, as dad died just before the end of the tax year, someone did not bother to reconcile his income to his income tax liability?

Most estates have a complete year's income tax allowances, so usually there is most probably a tax refund due.
Did you ask for the form(s) and apply for clearance?

HMRC cannot know that someone has died until they are told - when were they informed?
Presumably the department responsible for social security was sent the special death certificate form provided for the purpose?
Did they manage to act promptly - my limited experience is that however quickly you send off the form, they usually manage to make an additional payment.

I am assuming that the process in Scotland is similar to the English one - but down here, the inbuilt delays in getting probate, getting in the figures from all the organisations with which the deceased had a financial relationship and advertising for creditors, would have taken probably 6 months minimum, were they all efficient. (some of them including HMRC definitely were not efficient).

I think probate is like a garden - you must leave it open for a year to see what comes up.

Looking at things from a practical point of view, how much did dad leave and who has got it now?

ross1892

In scotland it is called confirmation not probate and i don't know what the differences are. The only thing my father left in his will was the house to my mother which was already paid off and worth around £280k.
According to HMRC my father started receiving his shell pension in jan 2007 and was also still working for shell until he died. HMRC have said that he was given a tax allowance for both of these incomes so his personal tax income was duplicated on them. I don't know what his tax code was on either the pension or the shell income. He was also receiving a war pension as well which i think is not means tested and doesn't show at all in his income. My mother had employed a solicitor to do the confirmation would it have been his responsibility to inform HMRC?