What, if anything, is required after death?

RAS

They will have been notified of the mother's death. They have information about the sale of property and assets within the last three years.

And ask questions.

JGB1955

AIUI the debt will be against all of those who have benefitted during the previous 7 years.

Marcon

sheslookinhot said:

RAS said:

Then their liability for the increasing debt to HMRC increases, as do the penalties. So they could lose the lot to HMRC in time.

HMRC doesn't move quickly as those wanting to sort out the IHT liability find frustrating.  But they will wake up one day.

I assume by “their liability” you mean the 3 children of the deceased. 

What debt to HMRC do they have ? Why would HMRC know anything about them ?

From what OP has said, a huge amount of money appears to have been given away in the last year or two of the mother's life, and will thus be counted for IHT purposes. If the estate doesn't have enough money to pay the IHT - and it sounds as if it doesn't - then the recipients will be responsible for paying up (a nasty surprise, I'm afraid):

Any Inheritance Tax due on gifts is usually paid by the estate, unless you give away more than £325,000 in gifts in the 7 years before your death. Once you’ve given away more than £325,000, anyone who gets a gift from you in those 7 years will have to pay Inheritance Tax on their gift.

OP - I suggest you send them the link to the quote above: https://www.gov.uk/inheritance-tax/gifts because if they don't get the IHT paid on time, interest and possibly penalties will start clocking up. I certainly wouldn't be rushing to 'reassure the daughter ... that she doesn't need to do anything'. It'll get even more expensive if she and her siblings do nothing.

Olinda99

Thanks all - I will pass on the advice but I suspect everyone is going to keep their heads down in the hope HMRC don't notice.

In fact I can't really see how HMRC would find out anyway. The mother died with effectively nothing so what would trigger them to look ?

Keep_pedalling

Olinda99 said:

Thanks all - I will pass on the advice but I suspect everyone is going to keep their heads down in the hope HMRC don't notice.

In fact I can't really see how HMRC would find out anyway. The mother died with effectively nothing so what would trigger them to look ?

Fat chance of that, and if IHT is not paid within 6 months of her death they are going to be facing interest and penalties. Tax evasion is also a criminal offence and can lead to jail time.

HMRC have visibility of house sales, bank accounts, training accounts and will know she has died. We are talking a £200k plus tax bill here they are not going to miss that. 

sheramber

Olinda99 said:

Thanks all - I will pass on the advice but I suspect everyone is going to keep their heads down in the hope HMRC don't notice.

In fact I can't really see how HMRC would find out anyway. The mother died with effectively nothing so what would trigger them to look ?

Automatic checks.

CKhalvashi

Olinda99 said:

Thanks all - I will pass on the advice but I suspect everyone is going to keep their heads down in the hope HMRC don't notice.

In fact I can't really see how HMRC would find out anyway. The mother died with effectively nothing so what would trigger them to look ?

It takes not a lot of time to cross-reference the property sale with the death. I could probably automate this in a few hours with about 50 lines of code subject to land registry records (which HMRC may not have) or SDLT (which they definitely would). I wouldn't be surprised if HMRC have automated this already.

There's also the below link, which takes a few minutes. I feel we have a duty to safeguard essential public services such as the NHS and Police by paying our tax.
https://www.gov.uk/report-tax-fraud

Keep_pedalling

A couple more thoughts on this. 

If a person dies intestate having previously given everything away then the beneficiaries of that person’s gifts are responsible for any IHT due. In a case like this HMRC are likely to take the line that this is deliberate tax fraud committed by the deceased and their beneficiaries so the penalties are likely to be harsh such as in the case of Hutchins vs HMRC.

 https://www.lawjournals.co.uk/wills-trusts-law-reports/hutchings-v-hmrc-2015-ukftt-0009-tc-on-appeal-from-tc-2013-00644/

Another consequence could be the loss of the transferable NRB and RNRBs. Both of these exemptions need to be claimed but if no one files an IHT return the HMRC may not take those into account when working out how much each person owes.

Finally do these people want to live with the thought that any time over the coming months or years (there is no time limit for HMRC to demand unpaid tax) they me be caught) 

poseidon1

Keep_pedalling said:

A couple more thoughts on this. 

If a person dies intestate having previously given everything away then the beneficiaries of that person’s gifts are responsible for any IHT due. In a case like this HMRC are likely to take the line that this is deliberate tax fraud committed by the deceased and their beneficiaries so the penalties are likely to be harsh such as in the case of Hutchins vs HMRC.

 https://www.lawjournals.co.uk/wills-trusts-law-reports/hutchings-v-hmrc-2015-ukftt-0009-tc-on-appeal-from-tc-2013-00644/

Another consequence could be the loss of the transferable NRB and RNRBs. Both of these exemptions need to be claimed but if no one files an IHT return the HMRC may not take those into account when working out how much each person owes.

Finally do these people want to live with the thought that any time over the coming months or years (there is no time limit for HMRC to demand unpaid tax) they me be caught) 

The Hutchings case puts me in the mind of Nadhim Zahawi ( past Tory Chancellor), and the penalty he incurred for failing to pay CGT on sale of his private company. In his case, his attempt to hide his liability ( via offshore trusts )  attracted a 30% penalty of around  £1 million on top of the liability itself.  

In the OP's case, it would only take 1 disgruntled whistle-blower within the wider family/friends circle to attract  HMRC's  attention or for HMRC to joint the dots themselves,  for potential dire consequences to befall the gift recipients. 

Whether deliberate or not, the OP's case does seem to have the hallmarks of conspiracy to commit fraud especially if he does proceed to  pass on to the family some of points raised in this thread. Ironically by sharing these points  with them, the family could no longer plead ignorance of the rules.

CKhalvashi

poseidon1 said:

Keep_pedalling said:

A couple more thoughts on this. 

If a person dies intestate having previously given everything away then the beneficiaries of that person’s gifts are responsible for any IHT due. In a case like this HMRC are likely to take the line that this is deliberate tax fraud committed by the deceased and their beneficiaries so the penalties are likely to be harsh such as in the case of Hutchins vs HMRC.

 https://www.lawjournals.co.uk/wills-trusts-law-reports/hutchings-v-hmrc-2015-ukftt-0009-tc-on-appeal-from-tc-2013-00644/

Another consequence could be the loss of the transferable NRB and RNRBs. Both of these exemptions need to be claimed but if no one files an IHT return the HMRC may not take those into account when working out how much each person owes.

Finally do these people want to live with the thought that any time over the coming months or years (there is no time limit for HMRC to demand unpaid tax) they me be caught) 

The Hutchings case puts me in the mind of Nadhim Zahawi ( past Tory Chancellor), and the penalty he incurred for failing to pay CGT on sale of his private company. In his case, his attempt to hide his liability ( via offshore trusts )  attracted a 30% penalty of around  £1 million on top of the liability itself.  

In the OP's case, it would only take 1 disgruntled whistle-blower within the wider family/friends circle to attract  HMRC's  attention or for HMRC to joint the dots themselves,  for potential dire consequences to befall the gift recipients. 

Whether deliberate or not, the OP's case does seem to have the hallmarks of conspiracy to commit fraud especially if he does proceed to  pass on to the family some of points raised in this thread. Ironically by sharing these points  with them, the family could no longer plead ignorance of the rules.

Ignorance of the law is, however, no excuse.

I've always been perfectly clear that I pay my taxes according to the letter and spirit of the law without sticking my head in the sand and that others must do the same to protect public assets. This is a family sitting on significant sums of money so on top of the clear legislation (your interpretation of which I agree with) there is a moral obligation on the friends of the OP to pay all tax legitimately owed.

This amount will be reducing anyway annually, so their friend stands to gain more than the headline 60% from this in any event.