Mistake on submitted IHT form.

Yamenja

I stupidly sent IHT205 off with a probate application, following my mother's recent death, thinking that I could just mention my eligibility for the extra £125K threshold for the property being inherited by a direct descendant, which would raise the threshold to above the value of the estate. Then I worked out that the application for that should have been on an IHT 435, meaning my tax form should have been IHT400, I e-mailed them to say I now realised this ( that was earlier today, so no reply as yet), but I have now realised, I think, that actually I shouldn't need to do that, *if* I had filled in the part of the IHT205 pertaining to transferred nil rate band from my father and included an IHT217. What are the chances of them letting me replace the earlier 205 with a revised one, plus the 217? I am assuming that as my parents had joint accounts until my father died (in 1998) and everything was just transferred to my mother, without a will or anything going to anyone else, that this should double the threshold and that will preclude any need for my making a claim with a IHT435... does that sound reasonable? Are they going to charge me for all the blunders? Do penalties apply when no tax is due? [Edit] Further googling suggests I can write to them explaining the correction needed, so presumably can also submit the 217 with the correction. One legal page advises using a form C4 to correct a 205, but on the C4 is actually says'Do not use this form to tell us about changes to the amount of transferable nil-rate band that was available from an earlier death. Instead you should write to us, giving details of what has changed.' I'm leaving this here in case it's helpful to anyone else (if they can make sense of it!)

Keep_pedalling

Don’t panic. You can submit the revised forms and penalties only apply to late payment and you have no payment to make.

Submit the new forms ASAP and include a covering letter explaining your mistake. There will be no fee for this.

Assuming your parents house was held as joint tenants, then it would have passed automatically your mother so probate would not have been required for him.

Yamenja

Keep_pedalling said:

Don’t panic. You can submit the revised forms and penalties only apply to late payment and you have no payment to make.

Submit the new forms ASAP and include a covering letter explaining your mistake. There will be no fee for this.

Assuming your parents house was held as joint tenants, then it would have passed automatically your mother so probate would not have been required for him.

Thanks so much KP. I believe they were joint tenants.  I'm so grateful for the amazing advice and support you and a few others here consistently offer. Although I've slowly been working out my massive blunders, it's incredibly reassuring to hear this from someone who knows what they are doing!

Yamenja

Keep_pedalling said:

Don’t panic. You can submit the revised forms and penalties only apply to late payment and you have no payment to make.

Submit the new forms ASAP and include a covering letter explaining your mistake. There will be no fee for this.

Assuming your parents house was held as joint tenants, then it would have passed automatically your mother so probate would not have been required for him.

I just got an e-mail saying they have granted probate! That's in 10 days after acknowledging receipt of the application  - but that will presumably include taxes that I shouldn't have to pay if my exemptions had been properly applied for. - should I still go ahead and post the new application and IHT217 asap? Am assuming so, but of course this complicates things. I guess I need to speak to them. Is it possible they could have applied the exemption on the basis of property going to a direct descendant because that was stated in the will? Time will tell, I guess. 

Yamenja

Maybe it's a good sign that its been granted, as usually IHT has to be paid before it is granted though, especially as it was through an IHT 205 not a 400...? The e-mail says: '

When you receive the grant, you should show the grant to the bank or other public authorities to access the <name>'s estate pay off any debts and taxes owed distribute the estate to those on the will or as detailed by law Find out what to do next at https://www.gov.uk/probate-estate after you get your grant of probate. This is the end of the application process. You do not need to take any action.'

poppystar

Did you actually put the value of the property somewhere on IHT205 or did you just value other assets then put a note in the additional information box mentioning it? If the latter I suspect someone at the probate office didn’t read the whole form! 

Its an an interesting one now... I’d be tempted to speak to either the probate helpline or the HMRC helpline on the matter to cover yourself. I think it is more the latter you should be talking to now but good luck with that as the automated press 1 press 2 etc will undoubtedly require you to press for help either with IHT205 or IHT400 before getting to speak to a human😕 ..Prepare for a long hold and if you can phone as soon as they open in the morning you will get through quicker in my experience.

Yamenja

I put the value of the property in the appropriate place on the form, included it in the total value of the estate (both net and gross) but also pointed out in the space for comments that it should be below the threshold because of the direct descendant nrb allowance. The reference to taxes in the e-mail panicked me, but of course it didn't specify inheritance tax and shouldn't have been granted if that was due.

poppystar

So just to clarify..both the gross and net values were above the basic £325k threshold, you submitted only the IHT205 and they granted probate? It will be interesting to see how they respond to your email and what, if anything they want you to do next. Keep us posted!

Yamenja

poppystar said:

So just to clarify..both the gross and net values were above the basic £325k threshold, you submitted only the IHT205 and they granted probate? It will be interesting to see how they respond to your email and what, if anything they want you to do next. Keep us posted!

Yes, that's exactly it... and will do! 

Yamenja

Paper copies arrived this morning, so all good so far! 

getmore4less

I suspect HMRC are fairly pragmatic a lot of times.

Their primary interest is collecting tax not creating work.

Whoever processed the IHT forms could see that the estate would not be subject to IHT and chasing the correct paperwork would not change that so why bother. 


There are two departments here the courts which deal with the grant and HMRC that deal with the tax.
I understand that with IHT205 the courts issue the grant unless HMRC put the stops on.

I would continue with the administration tasks now you have the grant  but be aware that there is this loose end and be ready to respond should HMRC come back and ask for updated paperwork.

For your own benefit a correct inventory and account and notes on what should have been submitted for IHT in case they come back later when you might not remember all the details.