IHT Penalties - Advice needed

scarybee

I have an ongoing problem with my sister who is the executor of my aunt's estate. My aunt died in June 2004 but things are still not settled. I took my sister to the probate court to get an order for her to produce an inventory and account (April 2007). Despite the order she has not supplied the information. We have had dribs and drabs of information and now have had a concrete reply from HMRC which confirms that she has only paid £4K of a £11k liability (she told my brother and I that she had paid nearly £16k...) I am now extremely concerned as I read on the website http://www.hmrc.gov.uk/cto/customerguide/page22.htm#2 that beneficiaries can be held to be liable and made to pay the penalties for the tax outstanding. We had a partial distribution of monies directly from the solicitor when the house was sold but there was an additional £62k in cash and shares that should have more than covered IHT and my sister has had all this herself. I have tried previously to get information from HMRC about the amounts she had paid because I was worried but they refused to give me this information - how can I be held liable for the fraudulent behaviour of my sister?
The system is not good - even when you get a court order from the Probate Registrar, he can't enforce it when she doesn't comply. Your only option seems to be to go to Chancery and incur all the costs involved in that. This has been a distressing nightmare of lies and betrayal. Despite what other posters say on this forum, I would recommend having estates dealt with by professionals - at least you won't lose you family over it if things go wrong and you can claim compensation.

localhero

I am sorry to hear about your experience. First of all the executors are personally liable for the payment of inheritance tax. It is only in very limited circumstances that other beneficiaries will be held liable - so I wouldn't worry too much about it.

When appointing executors the all important proviso is that they are honest and competent. In most cases a professional is an unnecessary expense, with no guarantee that the estate will be dealt with any more efficiently.

scarybee

Thank you for your sympathy - if all executors are liable will that include my brother who reserved his powers because he lives in NZ? He was blissfully unaware of any difficulties until I asked for his help last Christmas - since then he has been able to get figures for the tax paid. If my sister declares herself bankrupt then as I understand it the HMRC could recoup the IHT from my brother and I as there has been a partial distribution of assets - is this correct?
Scarybee