Recognising unreceipted debts to estate

Owain_Moneysaver

The nursing home and the utilities can be evidenced as statements can be got from them, and matched with late father's and the son's bank statements to show where they were paid (and not paid) from.

The physiotherapist cash payments is going to be harder to substantiate, although if the son can show he took £xx out twice a week from his account in cash from the date father entered the home, in addition to son's normal living expenses, it might be wingable. At least it may show it's an honest, even if disallowed, claim rather than a fraudulent one.

Yorkshireman99

Tom99 wrote: »

[FONT=Verdana, sans-serif]Paying someone in cash is not conspiring to defraud HMRC per se. I paid the chimney sweep in cash last week, am I conspiring to defraud HMRC?[/FONT]
[FONT=Verdana, sans-serif]Other than refuse to accept the physiotherapist payment as a debt there is no action that HMRC could take against the OP and the IHT419 form does not ask how each item was paid for nor for a receipt.[/FONT]
[FONT=Verdana, sans-serif]If a receipt was subsequently requested the the OP would say one is not available.[/FONT]
[FONT=Verdana, sans-serif]If fraud was committed HMRC's action would be directed at the physiotherapist.[/FONT]
[FONT=Verdana, sans-serif]However if the OP is that worried about the cash payment the just claim the nursing home bills which I would expect are far larger.[/FONT]
[FONT=Verdana, sans-serif]The solicitors comment that HMRC will reject any claim not back by a receipt is wrong, that is just their assumption.[/FONT]

No professional person that I know would refuse to give a receipt or an invoice. AIUI this was done repeatedly over a long period of time. I say that because the OP wants to reduc e the amount of IHT payable. That suggests, and I am happy to be correc ted, trhat the amount of unreceipted expenditure is large. You don't seem to conprehend that in conspricay two partiews are involved not one. Also HMRC are well aware of the sort of things people do to evade taxes. I am not saying the OP has done but they need to be caurious.

Keep_pedalling

Tom99 wrote: »

[FONT=Verdana, sans-serif]HMRC are prepared and Section 1 on form IHT419 is called “Money spent on the deceased's behalf – for example paying domestic bills”[/FONT]
[FONT=Verdana, sans-serif]Its designed for just this sort of situation, money spent shortly before the death of a parent when you have more important things to worry about, and no receipts are needed, at least not at first.[/FONT]
[FONT=Verdana, sans-serif]You have to say what the money was spent on, why the deceased's own money was not spent and why the debt was not repaid during the decease's lifetime.[/FONT]
[FONT=Verdana, sans-serif]I would suggest you fill in IHT419 with these debts and explain your reasons for not recovering the debt. Given they are nearly two years old its possible your claim may be rejected or receipts asked for but you can deal with that if and when that problem arises. [/FONT]

I would not say 2 years is shortly before death. I would not risk a full investigation because
I lacked invoices or receipts for something I was going to claim for. Quite why the OP did not use his authority of POA to pay these services is beyond me, and HMRC would probably think the same.

Yorkshireman99

Tom99 wrote: »

[FONT=Verdana, sans-serif]Paying someone in cash is not conspiring to defraud HMRC per se. I paid the chimney sweep in cash last week, am I conspiring to defraud HMRC?[/FONT]
[FONT=Verdana, sans-serif]Other than refuse to accept the physiotherapist payment as a debt there is no action that HMRC could take against the OP and the IHT419 form does not ask how each item was paid for nor for a receipt.[/FONT]
[FONT=Verdana, sans-serif]If a receipt was subsequently requested the the OP would say one is not available.[/FONT]
[FONT=Verdana, sans-serif]If fraud was committed HMRC's action would be directed at the physiotherapist.[/FONT]
[FONT=Verdana, sans-serif]However if the OP is that worried about the cash payment the just claim the nursing home bills which I would expect are far larger.[/FONT]
[FONT=Verdana, sans-serif]The solicitors comment that HMRC will reject any claim not back by a receipt is wrong, that is just their assumption.[/FONT]

Did the CS offer a bill or receipt? The only reason I can see that anyone would want to pursue professional fees to reduce IHT was if they were substantial. In which case why was no bill or receipt issued by tyhe physio? Sounds like a classic caser of tax evasion. It takes tow to conspire so you are wrong to think HMR&C will only pursue one. Obviously it is up to the OP so perhaps they will tell us how much money is involved.

Tom99

Yorkshireman99 wrote: »

No professional person that I know would refuse to give a receipt or an invoice. AIUI this was done repeatedly over a long period of time. I say that because the OP wants to reduc e the amount of IHT payable. That suggests, and I am happy to be correc ted, trhat the amount of unreceipted expenditure is large. You don't seem to conprehend that in conspricay two partiews are involved not one. Also HMRC are well aware of the sort of things people do to evade taxes. I am not saying the OP has done but they need to be caurious.

[FONT=Verdana, sans-serif]The OP is not involved in any conspiracy, they paid the physiotherapist in cash, nothing at all illegal in that providing the physiotherapist did not indicate the price quoted was for cash only or the OP ask 'is there a discount for cash'.[/FONT]
[FONT=Verdana, sans-serif]Not making a perfectly legal claim for an expense just because you paid in cash is paying 40% tax when you don't need to.[/FONT]

Tom99

Yorkshireman99 wrote: »

Did the CS offer a bill or receipt?

[FONT=Verdana, sans-serif]No receipt but he gave me an official looking 'Certificate of Chimney Sweeping' to say my chimney had passed the Smoke Evacuation Check![/FONT]

Yorkshireman99

Tom99 wrote: »

[FONT=Verdana, sans-serif]No receipt but he gave me an official looking 'Certificate of Chimney Sweeping' to say my chimney had passed the Smoke Evacuation Check![/FONT]

In which it is reasonable to believe the transaction is above board. A low value one off like that is fine. This is very, very different from what seenms to be multiple transactions over a period of moths or even years. In the absence of evidence I would expect HMR&C to be sus[icious.

Tom99

[FONT=Verdana, sans-serif]HMRC may well be suspicious and ask for further details about the debt, but unless a claim is made that can only be speculation. If no claim is made than the potential 40% tax relief will be lost.[/FONT]

Owain_Moneysaver

Also to be considered is whether the son is the sole beneficiary of the estate. If there is another legatee then their inheritance may be reduced if the estate admits the debt averred to, and the executor has a duty to the other beneficiary to reject unsubstantiable claims against the estate.

Of course, that could mean the son loses the entire amount of the debt, and the estate loses the 40% to be paid as IHT.

Tom99

Owain_Moneysaver wrote: »

Also to be considered is whether the son is the sole beneficiary of the estate. If there is another legatee then their inheritance may be reduced if the estate admits the debt averred to, and the executor has a duty to the other beneficiary to reject unsubstantiable claims against the estate.

Of course, that could mean the son loses the entire amount of the debt, and the estate loses the 40% to be paid as IHT.

[FONT=Verdana, sans-serif]They would get back the same %age of the debt as their %age inheritance (less 40%), unless they were not a beneficiary they would not lose it all.[/FONT]