who is liable for the tax?

John_Pierpoint

Legally there is a difference between confirmation and probate - I believe the most obvious is that the Scottish system gives greater rights to family members, when the deceased has tried to leave everything to the local cats home. However when it comes to tax as far as I know both countries are the same.
Dad must have owned more than (half?) a house unless he walked about naked and was maxed out on his credit cards - however let us assume that dad was no where near the 325K nil rate limit for inheritance tax and anyway he left everything to his widow. (You need to check this because it will come up again when Mum dies.)

Because the estate was below the IHT starting point (in most cases) of 325K and there are no complexities like foreign holiday flats, a simplified tax return for IHT purposed will have been submitted (IHT205). Who signed that form, which must have been incorrect?

http://www.scotland.gov.uk/Publications/2008/02/26152921/0

http://www.direct.gov.uk/en/Governmentcitizensandrights/Death/Preparation/DG_10029716

The tax system has been treating your dad as two people, thus has extended to him a fairly large interest free loan.
In my opinion this tax "error" means the tax is still due and the person who got the end of life tax return wrong is liable HOWEVER depending on who told what & to whom back in 2007/08 (When did dad receive his first pension payment from the Shell oil company?); you might be able to claim Extra Statutory Concession A19 (Search this forum for ESC A 19 )
This is HMRC making up its own rules, that allows it to let people like your father keep the loan from the rest of us tax payers, if it can be shown that HMRC were told the correct information and have woefully failed to act correctly on that information.

Good luck.

John.

The general theory of law in England is that your lawyer stands behind you not in front of you, I expect Scotland is similar. This means it is your job to sue your lawyer, not HMRC's.
[I took over the estate of my late grandmother, when my father within a few years after, and on going through the accounts I found about 15K (in today's money ) had gone missing.
Her sister, my great aunt had died shortly afterwards and the two different solicitors involved had dropped the money down the gap between them. I eventually got the money back plus interest. Not conspiracy just c0ck-up.]

Hawkeye4aneye

Whenever I dealt with an estate I always wrote to the Revenue in the first lot of letters asking for a copy of recent tax returns and asking if there was any tax liability. This was followed up once Probate was obtained by sending a copy of the Grant, in this case Confirmation, asking them to confirm there was no further liability to tax.

Had any of this been done the tax problem and liability would have come to light. Even if unaware of the total liability HMRC would have at least warned that this was a possibility and they would have warned against distributing the estate.

As John mentions the error was HMRC’s in treating your father as 2 separate individuals and was possibly a mix up between them and Shell. Hopefully they will write this off as another mistake, amongst many as the press would have you believe, however they may still demand some, if not all, of the tax back.

If tax does have to be repaid then perhaps they can take it gradually through your mothers tax code, as no doubt she is in receipt of a proportion (half?) of your fathers Shell pension now he has died. They can code it so that for a period of time a lower amount is tax free than it would be normally. Once the tax has been repaid they can revert to the normal Tax Code your mother is meant to have.