'Adjustments': what are they?

Lilio8

Good morning.

When I thought that probate would be near to be finalised, my solicitors contacted me letting me know that the Residual needs to be retained in the client account till we'll have heard from HMRC for possible 'adjustments'. I do understand that it is a safe step to take. It's going to take another 4-6 months, that is 1 year & 10 months since my dear latest passed before it'll all come to a conclusion -- it feels like an eternity! And the two other beneficiaries (there are three of us with me as sole executor) are now going to be even more peeved since they cannot get on with their own big shopping, I'm not looking forward telling them of the delay, not at all!

 This is my 2nd solicitor since the first one - let's call it Sols1-- had miscalculated and underpaid IHT by a whopping £76,000+! Sols2 managed to get Sols1 to reduce their fees by having them pay the accrued interest.

What are these 'adjustments' about? Why are the 'adjustments' needed since we did pay the outstanding in Summer? 

tooldle

It sounds as though the solicitor is waiting on confirmation from HMRC, to say they agree the amount of tax paid by the estate is correct. I’ve just waited 9 months for clearance (personal tax and capital gains).

poseidon1

Lilio8 said:

Good morning.

When I thought that probate would be near to be finalised, my solicitors contacted me letting me know that the Residual needs to be retained in the client account till we'll have heard from HMRC for possible 'adjustments'. I do understand that it is a safe step to take. It's going to take another 4-6 months, that is 1 year & 10 months since my dear latest passed before it'll all come to a conclusion -- it feels like an eternity! And the two other beneficiaries (there are three of us with me as sole executor) are now going to be even more peeved since they cannot get on with their own big shopping, I'm not looking forward telling them of the delay, not at all!

 This is my 2nd solicitor since the first one - let's call it Sols1-- had miscalculated and underpaid IHT by a whopping £76,000+! Sols2 managed to get Sols1 to reduce their fees by having them pay the accrued interest.

What are these 'adjustments' about? Why are the 'adjustments' needed since we did pay the outstanding in Summer? 

This all seems to have been a bit of a saga. 

Suggest you check with Sols2 that assuming they were satisfied with the adjustments they made to the estate IHT reporting which gave rise to the original  underpayments, they did go on to actually lodged with HMRC IHT form C4 below seeking a  formal clearance certificate- 

https://assets.publishing.service.gov.uk/media/67935298a0bd2a64fc27fc5a/c4_corrective_account_print_and_post_form.pdf

The form sets out the nature of any adjustments that were made for HMRC to reconcile back to the original submissions on the IHT400.  Generally underpaid tax may have resulted from understating the assets or over stating the liabilities. You should be able to recall which, since the C4  required  the executor's sign off, so hopefully you recall doing so and retained a copy.

Assuming C4 was lodged, as to how long before HMRC respond depends on how backed up they are in dealing with similar submissions.

If for some reason Sols2  have not reached the form C4 stage yet , you really need to know why.

Lilio8

poseidon1 said:

This all seems to have been a bit of a saga. 

Suggest you check with Sols2 that assuming they were satisfied with the adjustments they made to the estate IHT reporting which gave rise to the original  underpayments, they did go on to actually lodged with HMRC IHT form C4 below seeking a  formal clearance certificate- 

https://assets.publishing.service.gov.uk/media/67935298a0bd2a64fc27fc5a/c4_corrective_account_print_and_post_form.pdf

The form sets out the nature of any adjustments that were made for HMRC to reconcile back to the original submissions on the IHT400.  Generally underpaid tax may have resulted from understating the assets or over stating the liabilities. You should be able to recall which, since the C4  required  the executor's sign off, so hopefully you recall doing so and retained a copy.

Assuming C4 was lodged, as to how long before HMRC respond depends on how backed up they are in dealing with similar submissions.

If for some reason Sols2  have not reached the form C4 stage yet , you really need to know why.

> This all seems to have been a bit of a saga. 

It's been awful! Since Sols2 took over (they had originally drafted B.'s Will) it's been much better, save for pressure from the other two beneficiaries.

>.. they did go on to actually lodged with HMRC IHT form C4 below seeking a formal clearance certificate- 

I'm guessing that they did back in August. They must have sent another one, since they found other bits that needed to be added, e.g. interest from investment. But I'll check.

Thank you for the link to the form.

Lilio8

tooldle said:

It sounds as though the solicitor is waiting on confirmation from HMRC, to say they agree the amount of tax paid by the estate is correct. I’ve just waited 9 months for clearance (personal tax and capital gains).

9 months?!?   I do hope not have to wait that long. I need closure. It's been axhausting. And I need the other two beneficiaries not to be breathing down my neck.

WillowLeaf

It's easy for me to say but I would be telling the other beneficiaries to back off, that you're doing all the work, it's not enjoyable, it's not you slowing things down and if they have any bright ideas to present them.

Hopefully they don't think you're up to trickery and think that you've pocketed their share somehow.

tooldle

Lilio8 said:

tooldle said:

It sounds as though the solicitor is waiting on confirmation from HMRC, to say they agree the amount of tax paid by the estate is correct. I’ve just waited 9 months for clearance (personal tax and capital gains).

9 months?!?   I do hope not have to wait that long. I need closure. It's been axhausting. And I need the other two beneficiaries not to be breathing down my neck.

Have you made any distributions? I distributed a good chunk in advance of tax clearance being sought. Having looked after the deceased finances for the past decade, I was confident there would be no surprise liabilities 

Lilio8

WillowLeaf said:

It's easy for me to say but I would be telling the other beneficiaries to back off, that you're doing all the work, it's not enjoyable, it's not you slowing things down and if they have any bright ideas to present them.

Hopefully they don't think you're up to trickery and think that you've pocketed their share somehow.

Thank you! Yes, it's not enjoyable, not at all. I've not been able to sleep properly for well over a year!

Did they think that I've been up to trickery? Of course they thought so, since the very beginning, when they kept asking me if I was going to live at the house. Well, I prepped the house (that was very hard work!), found a good estate agent who agreed with my asking price, secured a buyer and sold the house in record time. It was very sad to let it go, so many memories, but it had to be done. 

With regards to them thinking that I've pocketed their share, they tried but they had to stop having 'those thoughts' a while ago. I informed them that I had instructed the solicitors to hold 'all' the funds in what they call the 'client account' and distribute according to B.'s Will, once the solicitors were ready. And I used the same solicitors also for conveyancing, same firm  

Lilio8

tooldle said:

Lilio8 said:

tooldle said:

It sounds as though the solicitor is waiting on confirmation from HMRC, to say they agree the amount of tax paid by the estate is correct. I’ve just waited 9 months for clearance (personal tax and capital gains).

9 months?!?   I do hope not have to wait that long. I need closure. It's been axhausting. And I need the other two beneficiaries not to be breathing down my neck.

Have you made any distributions? I distributed a good chunk in advance of tax clearance being sought. Having looked after the deceased finances for the past decade, I was confident there would be no surprise liabilities 

The big bulk of distributions has been done. Only the residual remains and the solicitors are acting cautiously, it seems to me, just in case the 'adjustments' require more tax to be paid. According to my calculation it shouldn't be too much, fingers crossed! HMRC already received quite a big bundle