HMRC Form R27 - potential repayment to the estate

John_Pierpoint

dori2o wrote: »

As long as you are recorded on the record as the executor/Personal rep, then you can arrange for the online system to be set up with the executors/PR details. In order to do this the R27, which includes a space for the Exec/PR details to be notified, should be submitted.

dori2o is a regular and respected poster & employee of HMRC (?) who makes informative postings on the "saving tax" section of the forum and who is usually quick to defend HMRC's efforts.

However from an HMRC perspective; often duelling with chrismac1 some sort of tax accountant.

I have looked out my actual correspondence:

Within a week of the death, I had sent a copy of the government death certificate plus a copy of the notice to make a SA tax return. (thus identifying the deceased exactly).
In the covering letter, I pointed out that:
1. I had personally paid the July tax in advance payment and so the account for the current year should theoretically be over paid. [It wasn't see above]
2. I had no chance of hitting the end of October deadline.
3. Could I be sent the appropriate paperwork?

I got back what might as well have been a compliments slip with an R27 attached. [I too was mystified by how it should be completed: gross v net etc]

By Xmas I had managed to gather together all the income figures for the previous tax year and at about that time the deceased got the automatic threatening notice to file.
It was at this stage I telephoned and was told to use the on-line system for the previous full year's account.
I wrote confirming this conversation.

So that was two opportunities for someone to substitute my details as personal representative of the deceased.

Having done what I was told; I then spent a fortnight checking my snail mail for the magic access number only to discover the rejection in my spam folder.

So I sent in the paper return.

The on-line system, following my paper submission got changed to my address and this is obviously where I made the second "mistake" by paying the tax on account demanded and 12 months after the death submitting the R27. By then I had probate and was indeed able to calculate the amounts due to the estate and the deceased's income for his last 5 months of life..

So is it me who has the problem or is it HMRC that needs to tighten up its procedures?

I can see some potential problems with the figures being submitted on-line by personal representatives - especially those, unlike me, who are having to sort out their first estate.

dori2o perhaps this is your opportunity to get noticed by creating a "bereavement" letter to be send to the next of kin of the 2,000 people per working day who die in the UK? It should include a decision tree showing what is needed, depending on the current status of the deceased's tax/benefits account.

TomsMom My actual experience with HMRC was actually more complicated and distressing than the above simplification - there were two other occasions where the HMRC staff failed to follow the instructions in their own on-line manual. In fairness I hit the peak of the chaos caused by the introduction of the new centralised computer system (though I did not know it at the time). Hopefully you will not find yourself getting answers to your letter before last, months after spending (elapsed) days on the 'phone sorting things out verbally.
Good luck let us know how it goes for you - good or bad.

Mrs_Money

TomsMum- just a thought - I've had more luck getting through to HMRC on the phone really first thing in the morning - say 9am - someone picked up immediately and made me jump!

TomsMom

So sorry guys, me again with another question which maybe someone can answer.

When I received the pack of forms to apply for probate, there was a form IHT217 - Claim to transfer unused nil rate band for excepted estates. I hadn't looked at this because I was waiting for grant of probate.

I assumed that because the form was sent I need to fill it in but reading through it it asks for the name and date of death of the spouse who died second (as well as details of spouse who died first). There are some questions which ask about "the spouse who died first" and then goes on to ask "What was the Inheritance Tax nil rate band at date of death of the spouse who died second".

So I'm thinking I don't need to fill in this form and that it's something that my executors will have to do when I die. Am I right? I just ignore this form and it's something my kids will deal with when dealing with probate for me eventually?

John - I will report back eventually. I will send off the R27 without filling in income details, will ask to do a SA and in the meantime I will write to the pension providers and see if I can get a P60 now, or at least details of income and tax for the period up to when OH passed. I'll come back to this thread for continuity so keep subscribed if you'd like to know how it goes.

Savvy_Sue

TomsMom wrote: »

When I received the pack of forms to apply for probate, there was a form IHT217 - Claim to transfer unused nil rate band for excepted estates. I hadn't looked at this because I was waiting for grant of probate.

I assumed that because the form was sent I need to fill it in but reading through it it asks for the name and date of death of the spouse who died second (as well as details of spouse who died first). There are some questions which ask about "the spouse who died first" and then goes on to ask "What was the Inheritance Tax nil rate band at date of death of the spouse who died second".

So I'm thinking I don't need to fill in this form and that it's something that my executors will have to do when I die. Am I right? I just ignore this form and it's something my kids will deal with when dealing with probate for me eventually?

I think you're right. The 'rules' changed not that long ago (in tax terms!) so that the second of a marriage to die could get a double helping of IHT allowance. I'm not phrasing that very well ... but just leave it, I wouldn't even keep the form, it may all have changed by the time it's relevant to your beneficiaries!

TomsMom

Thanks Savvy Sue, I'm sure that's right. I seem to have my dim head on lately .

ukmaggie45

Savvy_Sue wrote: »

I think you're right. The 'rules' changed not that long ago (in tax terms!) so that the second of a marriage to die could get a double helping of IHT allowance. I'm not phrasing that very well ... but just leave it, I wouldn't even keep the form, it may all have changed by the time it's relevant to your beneficiaries!

I agree with Savvy Sue. A married couple each have the full nil rate of tax now - it used to be only the first to die had, anything left to second spouse to die it all counted to just their nil rate for IHT. If you see what I mean! Have to say I don't think I explained that very well! Hmm, second to die gets the whole lot for 2 people, minus anything that counted for first to go... Does that make a bit more sense?

My Mum died about a month before the regulations changed, so we had to pay a huge amount of IHT. :eek: (my Dad had left everything to her, he predeceased her by about six and a half weeks) But there's a happy end to my story, I posted on here and over time had a number of helpful ideas/suggestions as to how we might consider proceding. We instructed another Solicitor, who took over from the one named in both my parents' Wills, and got most of the IHT back. Without the help of the wonderful people on the forums here we wouldn't now be living in our new home! :money: :j :beer:

Bottom line though is that yes you're right TM, it's something for your Executors to worry about when the time comes, which I sincerely hope won't be for many many years yet!

Best wishes from wild and windy Liverpool, Maggie

Edit: my parents both died in 2007, so that's when the regulations changed. They may change again of course!

Savvy_Sue

ukmaggie45 wrote: »

second to die gets the whole lot for 2 people, minus anything that counted for first to go... Does that make a bit more sense?

That's it! Didn't explain it very well myself.

John_Pierpoint

Just to finish off the confusion.
Here are the "Nil rate bands" that pay 0%
So after the change in the rules in October 2007 someone could have died at Xmas 2007 and left all his net worth, conveniently £300,000 pounds of it, to his widow. The widow could then die on 6th April 2009 leaving a net worth of £650,000 (300K of his and 350K of her own)
All of this would be tax free because the widow had inherited £300,000 and the right to 100% of a second nil rate band at the time of the second death.

Alternatively the husband could have left 150,000 to his wife and 150,000 to his children.

On the second death the wife would leave 500,000 but with one free allowance of £325,000 plus an inherited right to half another nil rate band ie £162,500 = £487,500 so at 40% = £5,000 tax to pay.

Some say the smart move is to leave the survivor the right to the income from the assets of the first death for life (called an interest in possession trust), to protect against fortune seekers and care home fees.

http://www.hmrc.gov.uk/rates/iht-thresholds.htm

nigem

Sadly I am in the same situation. Husband died end of October after ill health retirement a year earlier. I had sorted out most of his SA and was planning to submit online. However the PIN immediately stopped working I assume triggered by registering the death. Since then I have filed the paper copy as executor. I have now been informed that £100 fine is due as I missed the deadline in Oct.
The phone lines are dreadful, and usually answered after a 10-20 min wait.

Yes the IHT217 is for the second death in a couple to claim both inheritance tax free allowances. I had that with my parents too in the last few years.

John_Pierpoint

With the fine, there should be an appeal form.

Fill that in within 30 days - it worked for me.