CGT with inheritance [cgt] [captial gains]

NordicNoir

gnekelfihg wrote: »

No, there was no need for the house to be sold in order to settle the estate liabilities.

This is the residue question response from my solicitor:
[FONT=&quot]The residue would have been ascertained when the house was sold and the liabilities (including Estate Agents fees etc) were paid[/FONT]

Oh dear, they do not understand what HMRC means by the "ascertainment of residue". They seem to think that it means when the cash value is known to be final and that is not the case at all. You should go back and challenge them again, maybe pointing them to the HMRC links that I and purple haze have included. Another link that explains it well is here:
http://www.step.org/end-affairs

The solicitor should have access to technical helplines etc, so they have no excuse for not trying to get this correct for you. It is easy to assume that a "solicitor knows best" but they are only as good as their knowledge or ability to research. I have come across some shockers over the years who have tried to advise well outside of their level of expertise.

Have all of the other assets and liabilities of the estate been settled now and was the house sale the final bit? If so, as you are still the executor, you could inform the solicitor that you do not want them to handle any HMRC matters going forward and that you will do it yourself. Make sure that you get all of the information back from them.

The bigger problem, in my mind, is getting the market value at date of death correct. You previously said:

gnekelfihg wrote: »

UPDATE:
Booksurr said that Gov't Valuation Office Agency should be used but this does not seem to be the case.

Was it the solicitor that told you this? The CG34 is definitely the way forward for you to get a definite valuation at the date of death. You mention that the local increase would have been around 6%. If that is the case, you would most likely have no gain to declare at all as it would be under the allowance.

If it were me I would:

1. Get the valuation using the CG34.
2. Declare any gain on your half, on your tax return if you do one or just by writing to HMRC.
3. From what you have said about your brother living in the house, there would be nothing for him to declare.
4. Complete an estate tax return, if required for any income received during the period.

You may not feel confident enough to do this alone, so it would pay you to get a tax accountant, experienced in probate/estate work - it would be far cheaper than the potential £11k that the solicitors method may cost. You can find a list of accountants on www.step.org. Also, the advice that can be given on here is based only on the facts that you have given and there may be an important issue that has not been mentioned. An accountant would have access to all of your documentation to be sure that they are advising the correct way forward.

gnekelfihg

Have all of the other assets and liabilities of the estate been settled now and was the house sale the final bit?

All assets were divided between my brother and I - mainly (liquidated) stocks, shares & pensions. There were no outstanding debts (so I think that means no liabilities?). The house was indeed the very last bit.

Was it the solicitor that told you this[re:house valuation]?

Yes, the solicitor said that hmrc are taking the valuation from probate form and 'not budging'. I asked (via email) if she intends to submit a CG34 and she has ignored this question.

Thanks again for the advice.

NordicNoir

gnekelfihg wrote: »

All assets were divided between my brother and I - mainly (liquidated) stocks, shares & pensions. There were no outstanding debts (so I think that means no liabilities?). The house was indeed the very last bit.


Yes, the solicitor said that hmrc are taking the valuation from probate form and 'not budging'. I asked (via email) if she intends to submit a CG34 and she has ignored this question.

Thanks again for the advice.

It appears that the "residue was ascertained" before the sale and that the sale was made by the solicitor as a bare trustee and therefore the gain should NOT be assessed as a sale by the estate. The gain should be assessed directly on you and your brother.

The comment about what HMRC said could be two possible things - the solicitor misunderstood or was mislead by HMRC (maybe they thought that the estate paid IHT) or the solicitor is telling porkies. The links given previously show that this is only the case if IHT is involved. In your case the probate value was not ascertained and market value should be used.

I shall leave you be now as I do not want to badger you, it just makes me angry that the solicitor is giving you poor advice....

Good luck with everything!

gnekelfihg

Oh dear. Even after forwarding those links the other lady who I converse with (don't know if she is a solicitor or not) said

'well, you two were selling the house so it should be part of the estate'.

They've sent some cap gains form off to HMRC and are waiting for their reply. I said there's little point in doing that if all the details on the form are inaccurate.

I said that the house ownership should have been passed to my brother and I before the sale. She disagreed.

She said my solicitor and herself had only briefly gone over the information I forwarded. I will let them 'digest' what they should already know, and then be bringing my use of their services to an end unless HMRC magically fix their mess.

gnekelfihg

Just as an update...

I got a red book retrospective survey done. This was consistent with the house value as put on the probate for so I then contacted some other solicitors get on the original firm's back about their mishandling. The original firm then had another red book valuation done, and charged me(!). This valuation was much closer to the sale price. The two red book valuations were £325k and £370k so miles apart!

The original solicitors denied any wrong doing.

I made a formal complaint and they gave back the amount charged for their red book valuation. I said I would take my complaint to the ombudsman... I eventually got another £1.5k back (settlement to not complain to the ombudsman). I had to spend ~ £4.5k with the new solicitors, though that did involve work needed for the estate tax return as well as sorting through cgt mess that the original firm caused.

So in the end I'm still £3k down due to the mishandling, but better than ~10k