C,g tax

charlie2015

Hi I wonder if anyone can offer any advice when my fathers estate was valued . the executors valued all his assets at £554,000 at probate but sold house for £625,000 . a difference of approx. £70,000 .this you would assume would attract C.G.TAX they are saying their may be no tax at all to pay .they are also saying their accountant , solicitor, and they themselves have over a period of over 2years 7 months despite repeatedly trying . have had no figures or reply from H.M.R.C. they have they say acknowledged their call. does this seem normal to myself it seems a long time to hear no figures or nothing at all. this is an on going problem and has been mentioned before . does anybody have any advice on the above with many thanks.

Yorkshireman99

charlie2015 wrote: »

Hi I wonder if anyone can offer any advice when my fathers estate was valued . the executors valued all his assets at £554,000 at probate but sold house for £625,000 . a difference of approx. £70,000 .this you would assume would attract C.G.TAX they are saying their may be no tax at all to pay .they are also saying their accountant , solicitor, and they themselves have over a period of over 2years 7 months despite repeatedly trying . have had no figures or reply from H.M.R.C. they have they say acknowledged their call. does this seem normal to myself it seems a long time to hear no figures or nothing at all. this is an on going problem and has been mentioned before . does anybody have any advice on the above with many thanks.

Something is seriously wrong here. The executors should have obtained a professional valuation at the date of death. for the purposes of obtaining probate. IHT at 40% starts on an estate value of £325,000. However if the deceased had a spouse their IHT allowance may have been transferred so no IHT may have been payable. CGT would be payable on the gain between the probate value and the selling price. In any case the executors should have dealt with the estate within a year and distributed the estate proceeds. It sounds implausible that the executors have not been able to resolve matter with HMR&C. The executors need their backsides kicking and are liable for any losses as a result of their lack of action.

charlie2015

hi the executors only took estate agents valuations .swore oath at £554,000 but had previous to this sold house for £625,000 they say they informed HMRC ? last week I wrote to them asking a number of questions . they are not happy being held to account. asking how much CGT there is to pay and if there are any penaltys to pay they say they don't know about penaltys and have not heard from HMRC how are they liable? thanks

Yorkshireman99

charlie2015 wrote: »

hi the executors only took estate agents valuations .swore oath at £554,000 but had previous to this sold house for £625,000 they say they informed HMRC ? last week I wrote to them asking a number of questions . they are not happy being held to account. asking how much CGT there is to pay and if there are any penaltys to pay they say they don't know about penaltys and have not heard from HMRC how are they liable? thanks

How could the executors sell the house before probate? They had no legal authority to do so. If the value for probate was deliberately low then they broke the law. Why have they not distributed the estate? They sound completely incompetent. More detail needed to suggest what you should do. CGT is 28% of the gain minus the annual allowance. This would come out of the estate but if the executors deliberately under declared the value then they would have to pay it themselves. They might also be charged penalties.

charlie2015

hi the executors wrote to me on the 2.5.2014 to inform me that the house had been sold for £625,000 only to swear under oath that the total assets were £554,369 on the 29.5.14 at probate . this makes no sense to me .why would you put in the wrong figure unless they rushed probate .I asked them if they updated HMRC they say they did? . most of the estate has been paid out there is about £45 ,000 left .this has now been going on for 2 years 9months .and they are saying they have never had a reply or tax valuation from HMRC many thanks for your help

theoretica

Would a mortgage on the house reduce the total asset value below the sale price? Is it Net or Gross assets?

Crabapple

From what you say they agreed a sale on the property before probate was granted so presumably the sale went through shortly after.

The normal procedure in that case would be to submit the agreed sale value for IHT and probate. Property values have to be agreed with the district valuer and I find it hard to believe they would not automatically said the sale price should be substituted for IHT.

The revenue are frequently slow and just maybe if the executors were still negotiating with them it might be possible that it's not resolved but 2.5 years later saying the revenue haven't even spoken to them seems very suspect.

If a property is appropriated to beneficiaries then a CGT gain might be removed but you'd need a few beneficiaries to soak up a £70k gain.

The executors or their reps should be chasing the revenue and getting this resolved because it should have been sorted a long time ago. Unfortunately your only option aside from chasing would be to apply to get them removed which is not a simple or quick process.

Yorkshireman99

theoretica wrote: »

Would a mortgage on the house reduce the total asset value below the sale price? Is it Net or Gross assets?

The value should be the gross value at the date of death. Any mortgage owing reduces the overall estate value. The crucial point is that by undervaluing the house for probate this becomes the base value for any future CGT calculatio so more CGT is payable then need be. In any case deliberately declaring the value could result in an underpayment of IHT and incur penalties.

Yorkshireman99

charlie2015 wrote: »

hi the executors wrote to me on the 2.5.2014 to inform me that the house had been sold for £625,000 only to swear under oath that the total assets were £554,369 on the 29.5.14 at probate . this makes no sense to me .why would you put in the wrong figure unless they rushed probate .I asked them if they updated HMRC they say they did? . most of the estate has been paid out there is about £45 ,000 left .this has now been going on for 2 years 9months .and they are saying they have never had a reply or tax valuation from HMRC many thanks for your help

Was any IHT paid? If the executors made a capital gain as it seems happened then the state is liable for that and the executors should have made a tax return declaration to HMR&C and subsequently paid the CGT due. If, as you say, they undervalued the house for probate then they have caused a CGT liability by their own stupidity or negligence. In any case taking more than two years to administer an estate is outrageous. You need to find ours details of exactly what they have and have not done. If, as it seems, they had mismanaged the administration they can be personally liable for any losses suffered by the estate. It may be possible to convince HMR&C that the probate value should be adjusted and avoid any CGT liability but it is possible the executors may be personally liable for any penalty. I suggest they get urgent paid for, by them, professional advice sort out the mess they have caused.

charlie2015

hi it is not IHT there was the joint threshold of£650,000 which applied . it is CGT the difference between the values given above. what gets to me if only this had been done properly we would not be in this mess .the beneficeries have been kept in the dark all the way through this .well 3 out of 5 have .they are very reluctant to discuss what they are up to it has taken me nearly 3 years to find out what the offers for the house were. with many thanks

Yorkshireman99

charlie2015 wrote: »

hi it is not IHT there was the joint threshold of£650,000 which applied . it is CGT the difference between the values given above. what gets to me if only this had been done properly we would not be in this mess .the beneficeries have been kept in the dark all the way through this .well 3 out of 5 have .they are very reluctant to discuss what they are up to it has taken me nearly 3 years to find out what the offers for the house were. with many thanks

Thanks for that. The executors have nobody but themselves to blame. You have every reason to be upset at their incompetence. I suggest you write a formal letter to them copied to the other beneficiaries stating that unless they provide the full fact including copies of the correspondence they have had with HMR&C within fourteen days you will consult a solicitor with a view to having them removed as executors and claiming damages form them.