Tax allowance and married persons tax allowance ? Problem

nad1611

Savvy_sue I asked this question earlier in the thread too and I came across this.

http://www.hmrc.gov.uk/manuals/tsemmanual/tsem7256.htm

Don't know what you make of that. I guess if we hadn't discovered the error and they had, they would have had the same provision for collecting the debt in the same way as any other claimant, through the Notice in the London Gazette, which we posted in early September.

All in all we've done the right thing and leaving an approximate amount to cover any debt will be easy to do. The inheritance will be shared between two brothers so, very straightforward.
Thanks again all.

Savvy_Sue

nad1611 wrote: »

Savvy_sue I asked this question earlier in the thread too and I came across this.

http://www.hmrc.gov.uk/manuals/tsemmanual/tsem7256.htm

Don't know what you make of that. I guess if we hadn't discovered the error and they had, they would have had the same provision for collecting the debt in the same way as any other claimant, through the Notice in the London Gazette, which we posted in early September.

All in all we've done the right thing and leaving an approximate amount to cover any debt will be easy to do. The inheritance will be shared between two brothers so, very straightforward.
Thanks again all.

OK, now I've read that, it seems that the executors are supposed to think about and sort out the tax before distributing the estate, not just rely on HMRC chasing them.

And if they DON'T do that, and HMRC notice a tax liability, they can either lodge it with the executors if they're within the two month 'window', or go after the beneficiaries if not.

Either way, the executors should sort the tax out ... which we are now in the process of trying to do!

nad1611

Thought I'd update again, still no letter letting us know the position. We think we'll give it until after the first week of the New Year, if we haven't heard by then we'll give them a ring and get it followed up.

Once that position is known, what other information needs to be given to HMRC when wrapping up an estate, for example, we may have sold the house soon, there's no interest or anything on any other accounts etc, so wondered when you can go ahead in the knowledge that all Tax details have been met.

I remember when I was a beneficiary we were told that the Solicitor was waiting for the HMRC to find out the Tax position, so I wonder what that includes exactly.Thanks

nad1611

Hi I thought I'd bring things up to speed for those who showed an interest. I wanted to let you know that since the letter I mentioned receiving in November, we have received nothing further from HMRC at all.

We are able to keep some money back and the rest of the Estate will be being distributed very soon. My OH feels we've let them know everything about these circumstances and we know they received the letter because they responded to another matter within it in the letter we received in November, therefore we've done what we needed to do and it's up to them now, I feel I want to follow it up and find out what 's going on.

What do others think, should we let sleeping dogs lie? How much longer will be long enough as regards distributing the rest of the money?

Savvy_Sue

nad1611 wrote: »

Once that position is known, what other information needs to be given to HMRC when wrapping up an estate, for example, we may have sold the house soon, there's no interest or anything on any other accounts etc, so wondered when you can go ahead in the knowledge that all Tax details have been met.

I remember when I was a beneficiary we were told that the Solicitor was waiting for the HMRC to find out the Tax position, so I wonder what that includes exactly.Thanks

OK, I know this is going back a bit, but my response to it is that if you've sold a house, then there are two potential liabilities: you've sent the estate over the IHT limit (especially if the sale was for significantly more than you anticipated); and / or CGT if the house wasn't being lived in by the deceased for at least 3 years prior to death - but I don't know anything like enough about CGT, nor the situation, so you can probably ignore that ...

Then there's the possibility that a Trust was set up by the will, but you say it was a straight split between two brothers, so that's unlikely.

Which leaves the potential repayment of income tax.

nad1611 wrote: »

Hi I thought I'd bring things up to speed for those who showed an interest. I wanted to let you know that since the letter I mentioned receiving in November, we have received nothing further from HMRC at all.

We are able to keep some money back and the rest of the Estate will be being distributed very soon. My OH feels we've let them know everything about these circumstances and we know they received the letter because they responded to another matter within it in the letter we received in November, therefore we've done what we needed to do and it's up to them now, I feel I want to follow it up and find out what 's going on.

What do others think, should we let sleeping dogs lie? How much longer will be long enough as regards distributing the rest of the money?

I'd be one for letting sleeping dogs lie, and EITHER keeping something back, perhaps for another few years, or getting the other beneficiary to sign to say they'll pay their whack if HMRC come knocking on the door.

But if you're not one for that, then either your DH could phone the Estates part of HMRC and ask how long you should expect to wait, and whether you'll hear from them again if nothing is due, OR he could write a letter along those lines.

Savvy_Sue

BTW, be warned that if you do chase things up, you MAY find that HMRC write to your late FIL, at his previous address. I guess they may have already done so! See my experience here.

Mikeyorks

nad1611 wrote: »

What do others think, should we let sleeping dogs lie?

Even if they snore!

You've filed the R27 at which point they should have picked up any anomalies. I can't see - 6 months on - anything that's going to cause them to re-examine old PAYE years?

If you're super cautious then keep a bit of money in reserve for a few more months before distributing it.

nad1611

Thanks both for your replies. I think we'll probably go for the keep something back and sit and wait.

Savvy Sue everything's fine with the house situation and neither the IHT or CGT applies in this case, but thanks anyway.

jimmo

If we look again at the HMRC Staff Instructions,

http://www.hmrc.gov.uk/manuals/chmanual/CH54200.htm

HMRC have 4 years from the end of the tax year in which the deceased died.

So, as your father-in-law died in June 2011, that was in the Tax year 2011/12 and HMRC have until 5 April 2016 to make assessments.

On the other hand, the fact that the executor made the necessary declaration (that your father-in-law had underpaid tax) in or about September 2011 and HMRC have done nothing about it now, more than 6 months later, should be pretty embarrassing to HMRC and, the longer they take to reply, the more embarrassed HMRC should be but that doesn‘t change the legal position.

If you want to be absolutely sure of your ground, the executor should retain sufficient funds to satisfy the tax underpayment until a week or 2 after 5 April 2016, just in case.

On a practical front, I think it is common ground amongst most of us who claim to know a thing or 2 about tax, that we would distribute the estate in full now and take our chances that HMRC may suddenly wake up.

However, the big advantage we may have over you, is that we would be pretty confident of repelling HMRC if they came knocking.

In effect, the HMRC deadline (5 April 2016) is still the best part of 4 years away and that really is a long time to be hanging about waiting to see if HMRC wakes up.

If you are going for the option of keeping something back I think it important to be content with your decision. Put your file away in the filing cabinet now and make a diary note to take it out again in April 2016. Then sit back, relax and forget about it.

If anything happens you’ve got it covered. Can you live with that?

nad1611

Thanks jimmo, sound advise as always. The answer to your "can you live with that" scenario is well, yes. Particularly as we now have an actual time frame with which to work.
That is I suppose, what I was really after, knowing just how long they could still realsistically, "come a calling"!

We can easily put the money away earning a little interest and in 4 years or so know we've done the right thing. That money would have been invested anyway and not touched, so it makes no real difference.

Thanks again.