Inheritance Tax

Help_Desperate

Hi Folks,

Firstly if anyone takes the time to read all this and replies I am more than grateful. I will try to keep it short and list bullet points to make it easier to read.

In 2007 My father died and I paid what I thought was all the inhertiance tax. He had several accounts and the solicitor charged a fortune as It was that much of a mess.

I had two public houses that both did ok then lost everything I had made plus what I had inherited.

The only thing that was left was the house I had been left which HMRC valued at 260k which had a 86k mortgage on.

Last year I received a notification that the remaining balance was due for the inheritance tax for 22k.

Unaware of this I contacted the solicitor who had retired and they said they could not speak on behalf of him anymore.

The house sold just before Christmas for 176k Minus the 86k Minus 25k In debts that I had from the Public Houses. I was in a lease so could not get out of them quicker. That left 65k and with that I had nothing left and no where to live so bought a house for 60k in Scotland. I thought by paying HMRC bits each month this would delay them but they now say because the house had sold the balance is due in full.

Is there anything I can do not to lose my new house? I have bought as cheap as possible as I just needed somewhere to live as I am now past retirement age and only have my pension as a form of income. HMRC do not seem to care about the money I have contributed from my 15 years in the public house trade.

Any advice would be most grateful as I have not slept well since I received the letter over 12 Months ago.

Kind Regards

getmore4less

You are going to have to go back to the estate accounts and see what has happened and why there is outstanding IHT.

xylophone

Did your father's wife predecease him? Did your father die after 9 Oct 2007 - if so, any possibility of unused IHT allowance?
http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

I am wondering whether the CAB might assist. http://www.cas.org.uk/

John_Pierpoint

Oh dear what a mess.
Who was the executor?
Who has got all the paperwork now especially the set of accounts for dad's estate?
The firm of solicitors [STRIKE]will[/STRIKE] should have kept all the documentation for the estate as it includes real estate transactions and these can involve a statute of limitations reach of 20 years.
[I got on quite well with the solicitor who inherited the paperwork about the estate of my father who died in the 1960's - but he was reluctant to get it out of the "archive" - eventually we agreed he could find it and I would spend the best part of a day trawling through it - I found a couple of "nastys" where the money had been incorrectly handled all those years ago but decided that it was too late to do anything about it (one was a positive saving of money and the other was an unclaimed debt, they more of less cancelled each other out), so I put the paperwork back in the bundle and said nothing]

You are almost certainly in this situation:

Paying by instalments on a house

Most people choose to pay by instalments when the estate includes a house.
If you plan to sell the house, you only need to find 10 per cent of the Inheritance Tax due by the six-month deadline. You will then have a year before the next instalment is due to sell the house and pay the full balance.
If you plan to keep the house and live in it, you may prefer to pay by instalments because you only need to find 10 per cent of the Inheritance Tax each year (plus the interest), rather than having to pay all of it up front in one lump sum.

http://www.hmrc.gov.uk/inheritancetax/paying-iht/yearly-instalments/index.htm



Have you not noticed that you were paying tax instalments on the real estate in dad's will ?


I am surprised that HMRC has allowed you to sell the real estate and get your hands on the money, without settling up with HMRC first.


Though my father died deep in debts repayable on demand, he owned (thanks to a mortgage protection policy) a nice house and he was the remainder man together with his sister, of another Edwardian pile occupied for life by his aunt and formally owned by his mother.

So his estate had no money and death duties to find.

The third "nasty" I found was that thirty something years later the house, now my late mother's home, had a legal charge in favour of HMRC on it. (that is a restriction on sale similar to having a mortgage)

Fortunately I had kept the cheque that paid the final instalment of death duties in the 1970's; as the first response to my letter, I got from the Capital Taxes office, was that I did not know what I was talking about.

Good luck with your efforts to reconcile the accounts of your late father and establish your exact liabilities.

John

PS
This is the change of legislation in favour of the estates of widows and widowers, who have died on or after 9th October 2007, suggested by a previous poster.

Transferring an unused Inheritance Tax threshold

Since October 2007, you can transfer any unused Inheritance Tax threshold from a late spouse or civil partner to the second spouse or civil partner when they die. This can increase the Inheritance Tax threshold of the second partner - from £325,000 to as much as £650,000 in 2012-13, depending on the circumstances.

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm