capital gains tax

charlie2015

I wonder if anyone can help me . I have asked a similar question before some time ago .my father died in feb 2o15 .the PRS swore under oath on probate that my fathers assets were £550 000 when they knew they were £625000 .this left the beneficeries with a CGTAX bill on the £75000 difference this has been going on now for nearly 2 years . when I write to them they say the final £45000 cannot be shared out because they are dealing with HMRC .the last letter I wrote to them in JAN 2016 they said this was still on going .and we might not have to pay any CGT at all. I can not understand this as there is an excess of £75000 this is just dragging on and looks very suspicious can anyone give me any advice as to what could be going on. with many thanks

Yorkshireman99

charlie2015 wrote: »

I wonder if anyone can help me . I have asked a similar question before some time ago .my father died in feb 2o15 .the PRS swore under oath on probate that my fathers assets were £550 000 when they knew they were £625000 .this left the beneficeries with a CGTAX bill on the £75000 difference this has been going on now for nearly 2 years . when I write to them they say the final £45000 cannot be shared out because they are dealing with HMRC .the last letter I wrote to them in JAN 2016 they said this was still on going .and we might not have to pay any CGT at all. I can not understand this as there is an excess of £75000 this is just dragging on and looks very suspicious can anyone give me any advice as to what could be going on. with many thanks

Swearing a false oath is a criminal offense. Who are the PRS and why did they under declare the value? Whilst it might reduce IHT the sting in the tail is the CGT.

charlie2015

one of the PRS is a beneficerie the other is her husband .it looks like they rushed probate to get quick cash buyer. what I need to know is would it take nearly 2 years to sort this out with HMRC .many thanks

Yorkshireman99

What does PRS stand for ? If the executor's have lied on the probate application then they are likely to be in serious trouble.HMRC are likely to investigate in detail and impose penalties. They have nobody but themselves to blame. You might contact HMRC yourself.

konark

Were the assets property or shares?

Undervaluing a house can save IHT (40%) but lead to a CGT (28%) liability so probably a reason that people do it. CGT isn't payable until well after a house has sold, this may be the reason for the delay. I'd be wanting to see some accounts at the end of all this.

charlie2015

thanks for the replys .PRS are executors .assets were in property.they went with estate agents valuation of £550000 but they knew the house was sold for £625000 when they swore oath .they sent me an email to this effect a month before .I also had property valued at £625000 . and told them so . is it a fact that HMRC impose penalties . because if it is they are keeping this very quiet who would pay any penalties ? .konark we have discussed this before still ongoing with many thanks.

Yorkshireman99

charlie2015 wrote: »

thanks for the replys .PRS are executors .assets were in property.they went with estate agents valuation of £550000 but they knew the house was sold for £625000 when they swore oath .they sent me an email to this effect a month before .I also had property valued at £625000 . and told them so . is it a fact that HMRC impose penalties . because if it is they are keeping this very quiet who would pay any penalties ? .konark we have discussed this before still ongoing with many thanks.

HMRC do impose penalties and stiff one at that. The estate will be laible for the extra IHT but if the executors made a false declaration they will be personally liable. Somebody needs to tell the executors to sort it out and come clean with HMRC.

charlie2015

the PRS will probably say they have made a mistake and did not know what they were doing. but prior to this a month before probate they put house on market for £650000 and had offers over £625000 .are PRS liable or all the over beneficeries who have had no input. they will say they had 3 estate agents valuations and went with the highest. with many thanks

Yorkshireman99

charlie2015 wrote: »

the PRS will probably say they have made a mistake and did not know what they were doing. but prior to this a month before probate they put house on market for £650000 and had offers over £625000 .are PRS liable or all the over beneficeries who have had no input. they will say they had 3 estate agents valuations and went with the highest. with many thanks

The executors are personally liable. They have a duty of care to do the job properly. Estate agents valuations are notoriously inaccurate and should never be used where an estate is likely to be close to or above the level where IHT is payable. A RICS or equivalently qualified surveyor should be used. From what you have said they were negligent.

troubleinparadise

Ignorance is no defence with HMRC.

HMRC do link capital gains declarations with probate valuations for properties; they are tax experts, and funnily enough know all the methods people use to reduce the amount of tax that needs to be paid - let's hope the executors didn't think they could beat the system

antrobus

troubleinparadise wrote: »

Ignorance is no defence with HMRC.

HMRC do link capital gains declarations with probate valuations for properties; they are tax experts, and funnily enough know all the methods people use to reduce the amount of tax that needs to be paid - let's hope the executors didn't think they could beat the system

I think you have missed the point. The PRs undervalued the property at probate, thereby increasing the amount of tax that needs to be paid. That's why the OP is complaining about it; he's going to get less money.

charlie2015 wrote: »

.... I can not understand this as there is an excess of £75000 this is just dragging on and looks very suspicious can anyone give me any advice as to what could be going on. with many thanks

Negotiations with HMRC?

Read this;

http://www.taxation.co.uk/taxation/Articles/2013/10/30/315851/acquisition-value

Basic summary; if no IHT was payable, then the value of the deceased's assets will not have been 'ascertained' i.e. fixed, and thus if the asset is subsequently sold at a value greater than that quoted at probate, and thus you want to change that number, you have to go back and agree a new number with HMRC.

P.S. PRS would be 'personal representatives' - legal catch all term for persons dealing with the estate, either executors or administrators if there is no will.