Wills/Probate and Inheritance Tax

ECYF

Hello,

I am hoping to find someone that has experienced an HMRC Audit of Inheritance Tax paid from a will. Having been left a property in a will, it's going on about 4 months now that HMRC have been supposedly auditing the amount of IHT paid, and if any is due back. Is this a normal time frame?

The Solicitor has said this is what is holding up the finalization of Estate Accounts - their bill now totalling £17,000 12 months after the deceased was laid to rest.

Thanks for any help.

Yorkshireman99

How much? What is the estate value? That is a huge fee. HMR&C do this sort of audit from time to time.

Crabapple

HMRC have always been slow and seem to be getting worse and it's certainly taking months for them to deal with IHT accounts now.

ECYF

We are not pleased with the way the firm has handled the estate at all. The first meeting with the person in charge of doing it was not promising, when he referred to himself as a Solicitor, when he is in fact a Probate Executive.
We do not know the value of the estate, we only know what the Will said, that being the risidual of the estate is to be split between my brothers, sister and I. Property valued at £250,000 at and we believe cash totalling around £110,000.

Their initial estimate of costs was 2% of Estate, but then in a letter they said 2-4% and 1.5% of cash and 0.75% of property as sugested by Law Society. This put it at a max around £14,000 but in a letter last week they informed us this increased to £17,000 + VAT.

Savvy_Sue

You can ask for the solicitor's bill to be checked, there's a technical term which eludes me right now ...

Curlylady

My late mothers estate totalled around that figure, however my solicitor did not charge that fee, more like £540 to complete probate, no IHT was due as the assets passed from my father. Also probate took only a few weeks. Is the solicitor an executor? Why are they taking/ claiming a percentage of the estate?

Yorkshireman99

Taxed is the term you are looking for.

getmore4less

Was there any transferable nil rate band?

I would be investigating why HMRC wanted to take an interest in this estate and why the executors were unable to satisfy them quickly.

That £17k seems excessive for seems a relatively simple estate.

£5k would be more reasonable unless there were complex assets.

greenbee

Sadly solicitors seem to be doing this more and more - there have been several articles about DIY probate due to excessive solicitors charges. When my dad died his solicitor didn't mention charges, just told us what they'd do and what they needed - when I asked, they sent their ts & cs and forms to sign (having actually started) and I saw it was hourly rate PLUS 1.5% of the value of the estate, so I decided that DIY was easier - particularly as I'd have had to give them most of the information anyway.

Mind you, I'm doing the IHT work and filling in the forms today so I may regret it... but three months on my mother is starting to be more capable (she's sorted issues with the burglar alarm, house insurance, pension and also sent off for funds that don't require probate to be released to her) and things are making a lot more sense.

I do have concerns about the ethics of solicitors who apply these charges without advising bereaved and grieving relatives to go out and get other quotes before making a decision.

Tigerlilykiss16

Hi

We are not waiting for an HMRC audit but we are awaiting the clearance certificate from HMRC that all tax has been paid on the estate. Inheritance tax was calculated and paid and all assets were liquidated in June 2016 (deceased passed 8 December 2015). We have been waiting since June 2016 for the certificate, we were told by our solicitor in November 2016 that HMRC had a 7 month backlog.

HMRC advised 5 weeks ago, the backlog had cleared (although they dispute it was ever 7 months) and they were currently working to a 4 week turnaround. I called them yesterday and was advised our file still hasn't been dealt with and it could be another 2-3 months yet! Another chaser was sent to the team handling our file.

Whilst I accept this doesn't directly answer your question, it will hopefully give you a flavour of the current state of the Probate and Inheritance department at HMRC. Our estate is being handled at the Nottingham office.

We wrote to our MP several weeks ago and today is the deadline for the response from HMRC. It may be worth you doing something similar.

Have you spoken to HMRC yourselves? If you haven't they will only give information to the Executor if they are named on the forms submitted. If the executor is not named on the forms, you will need to draft a letter and ask the solicitor (legal rep) to countersign the letter giving authority for the executor to discuss the matter with HMRC. (If the solicitor (or rep) does the letter it will add to your already eye watering costs).

Incidentally, it was implied during my call with HMRC yesterday that those who shout the loudest are being dealt with quicker!

I hope this assists. I will endeavour to get back to you with any updates.

ECYF

Thank you all for your replies so far.

It's good to know HMRC are genuinely running a backlog. The Solicitor (Probate Exec) couldn't/wouldn't even give us a time frame, and seemed unwilling to contact them to find out, we would very much like closure on the matter, given the circumstances of the whole situation, and other family matters that have arisen since. As we are not Executors, only Beneficiaries, we cannot speak with HMRC directly.

I will say that the experience we have had with this, I sure hope to never have to deal with a Law firm, or bank, being Executor again. I would much rather handle it myself, and have told my parents not to leave it to someone outside the family to deal with their estates when the time comes.

@getmore4less - the person who died was single, no transferrable amount. We were told that due to the estate totalling just over the £325,000 threshold, they see that as a higher risk of someone trying to dodge IHT and so it was picked to be audited - or perhaps it was totally at random. £17,000 is the highest amount I have seen for such fees, having read about experiences online. The estate was in no way complicated, a handful of bank accounts, one property - no shares, no pensions to be claimed, nothing difficult, I would think.

My family are not looking to get more money from the estate, we just feel that the person whose estate it is has been seriously mishandled, by someone who lacked empathy and care from the beginning. Misleading us and not being pleasant to deal with at all. He felt it necessary to tell my parents that he: "was not a very nice person" - considering he had been elected to handle the estate of a deceased person, not a criminal in court, this attitude was not needed.
For a whole host of reasons we are going to submit a complaint once we receive the final estate accounts, we fear doing so before could prompt them to be more difficult and drag the process out longer - we may then refer to the relevant Ombudsman for their opinion.

Thanks again.