Newly found assets and IHT

Murdina

What happens if assets are identified years after a person died (eg through the new lost accounts register) especially if the estate was liable to IHT and all the returns etc have been made and the IHT settled in good faith? And what if the person who would have inherited has died since as well and again their estate all settled up in good faith?

Many thanks.

dzug

Well assuming good faith, you have to re-open both estates, pay any extra tax due and distribute what's left. Whether HMRC would expect interest, I don't know.

Murdina

Jimmo thank you for your comments which are pretty much what I thought so too. I had looked at the manuals and could find no specific mention of this anywhere, since it cannot be an unusual situation. However, what about the 20 year cut off?

I also wondered about the mechanics of the whole thing i.e. can one now claim title to these assets?

Also, there would possibly have been some interest rolling up on these investments, suggesting tax and interest due on that as well (here I think penalties would not be an issue, because the person to whom the income was due is now also dead). It may well be that the taxes and interest exceed the value of the asset concerned, assuming title could be established by the executors of the second estate.

Willman_Rodders

Hi,

I'm no legal expert so my comments may be wrong...

HMRC need to be advised on the newly found assets of the deceased by the executors/administrators of the estate, and seek amendment to their earlier submission.

This page from the HMRC website ...

http://www.hmrc.gov.uk/CTO/customerguide/page22.htm#d

appears to set out how the penalties for late/incorrect submission will apply; they appear to apply sizeable penalties to start with, and then reduce these as 1. the facts of the oversight are established and 2. dependant upon the cooperation of the executors/administrators of the deceased estate. It's HMRC's judgement call.

Now, once the IHT issue has been resolved (including payment of o/s dues) with HMRC then ownership of the newly found assets will vest with the beneficiay/ies [as per DECEASED PERSON 1's original will or rules of intestacy.] The executors/administrators of DECEASED PERSON 1 now have to locate these beneficiaries.

This task could be onerous - especially as implied within the original post that the new beneficiary [DECEASED PERSON 2] has also now died. I suspect the process will now be that the executors of the DECEASED PERSON 2 will also have to revisit their submission to HMRC re the IHT - similar to the above paragraph. Then, once sorted, the assets can then be vested with the benficiaries of DECEASED PERSON 2's estate in accordance with their will / rules of intestacy.

If the amounts are small it might be worth the executors seeking a court order permitting them to pay the newly found money into court - s63 Trustee Act 1925. (My understanding is that the Statute of Limitations (SoL) applies to debts and repayment of loans, not to the ownership of assets; so the 6 year limit applies to the repayment of the overdue IHT, but not the time limit when the right of ownership expires - under the SoL legislation. I see Murdina mentions a 20 year cut off - which I presume is under different legislation)

If any penalties are applied by the HMRC you will need to revisit the will(s) to see what protection, if any, the executors have and if it will allow them to reclaim these penanlties from the deceased's estate.

Hope the above is of some help.