Correcting an error on probate after it's been granted

TheotherDenis

I'm an executor for my brother's estate. He died in 2021 and probate was granted in Nov 21 after the IHT liability was settled. In the process of distributing the estate proceeds we have just discovered that a car was wrongly included as an estate asset when it should have been declared as a gift to a (non-civil) partner. The value of the car was £11k ie over the £3k annual limit for gifts without reservation. IHT was paid on the full value of the car since it was erroneously included as as an estate asset.

So - how do I proceed? Do I have to inform HMRC of the error and is there a process/form to do so? (I can't see this situation covered on the gov.uk pages). I don't believe the error has meant that IHT has been underpaid.

Secondly If the car had been treated as a gift, as it should have been, can I use the annual £3k gift allowance to offset the IHT liability? I find the gov.uk pages don't make this clear.

Thanks for any help!

Keep_pedalling

Just to clarify, he was the registered keeper but he gifted the car to his partner before his death?

Assuming the above is true and the gift was made within 7 years of his death then it would reduce the IHT liability if he had not used up his annual allowance before making this gift. If his full £3000 allowance was unused then IHT would only be payable on £8000. If he had not used any of his previous year’s allowance then that would reduce that to £5000, so there is a potencial overpayment of £2,400.

To make a correction you need to submit for. C4

https://www.gov.uk/government/publications/inheritance-tax-corrective-account-c4

TheotherDenis

thanks that is very helpful