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Ask Clare Your Own Question

Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 33283
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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can i appeal against inheritance tax if the probate on my mothers

Customer Question

can i appeal against inheritance tax if the probate on my mothers death took so long that we have now lost out by a few months and have to pay £150,000 tax. My father died in October, but if he had died next March there would have been nothing to pay. My mother died in March 2007 but probate which was not contested and not complicated took just over a year.
Submitted: 2 years ago.
Category: Law
Expert:  Clare replied 2 years ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
Could you explain exactly what has happened please?
Clare
Customer: replied 2 years ago.

My mother died in March 2007. The will passed on all of the estate to my father and he subsequently passed on about £100,000 to the 3 children as a gift so that if he died after 7 years that amount would not come under inheritance tax. However the probate for my mothers death did not happen until March 2008 - one year later even though the will was not contested and it was not particularly complicated. My father has now died in October - less than 7 years after probate which means that the £300,000 gifted now counts towards his estate and we have to pay inheritance tax of about £150,000 between us. I have heard that it is possible to contest this if the probate took too long - if it had taken the average 6-7 months we would not now be paying inheritance tax, can we appeal saying that the probate took too long and it was unreasonable?

Expert:  Clare replied 2 years ago.
Hi
How much is the estate worth in total?
Clare
Customer: replied 2 years ago.

Just short of £1million.

Expert:  Clare replied 2 years ago.
Hi
I am afraid that since the Estate was would up within a year (sometimes referred to as the "Executors Year") it is unlikely that HMRC would agree that Probate had taken too long.
However you are entitled to substantial Taper relief which will reduce the bill considerably
https://www.gov.uk/valuing-estate-of-someone-who-died/valuing-gifts
Making it even less likely that such an appeal would be successful
Please ask if you need further details
Clare
Customer: replied 1 year ago.

I don't think it was a year. It was just over the year. Also we have been told that we are not entitled to taper relief so we are paying tax on the full amount over the £650 tax allowance for both my parents.

Expert:  Clare replied 1 year ago.
Hi
Why are you not entitled to taper relief?
Clare
Customer: replied 1 year ago.

Not sure - we have been told that it is because we received £271,000 between the 3 of us in Feb 08, after the death of the mother, followed by £357,000 between the 3 of us in March 12, as a result of the sale of the fathers property. The father died in Oct 14. The 3 of us have therefore received in gifts a total of £628,000 and we are told that we therefore have to pay full 40% inheritance tax on the remaining £376,000 apart from the £22,000 that brings the gifts received up to the £650,000 nil rate threshold. Do we get taper relief?

Expert:  Clare replied 1 year ago.
Hi
Was the £271,000 received under the terms of your mother's Will?
Clare
Customer: replied 1 year ago.

On the mother's death in 2007 her estate was passed to the surviving father - he then gifted £271,000 between himself and his 3 children equally.

Expert:  Clare replied 1 year ago.
Hi
So in 2008 you were all gifted £271,000 in total - which is subject to Taper relief of 80% - so £54,200 counts towards your father's estate
To have qualified for full relief the gift would have had to have been made before October 2007 - which would have saved you £21,600 between you - BUT i am afraid there is no basis on which it could be said that the Probate should definitely have been completed within seven months I am afraid
Clare
Customer: replied 1 year ago.

This is where we are confused - we are being told that the taper would not apply to the first 2 gifts of £271,000 and £357,000 because they come below the £650,000 threshold and no tax is due. And that taper does not apply to the remainder of the estate as this is passing on father's death so no period involved.

Expert:  Clare replied 1 year ago.
Hi
My apologies i was thrown by the extra gift - I will need to rework the figures.
However I am afraid that the timing of the first gift does mean that no appeal is possible- I will get back to you on the figures
Clare
Customer: replied 1 year ago.

Hi, we accept the situation about timing of the probate for the first gift - what we need to know about is our last question above about whether either of the 2 gifts received in 2008 & 2012 are eligible for taper relief, thereby reducing our IHT bill overall. many thanks

Expert:  Clare replied 1 year ago.
Hi
I will get back to you on that - I need to check something with a colleague who I can speak to tomorrow
Clare
Customer: replied 1 year ago.
Thanks.we'll wait to hear.
Expert:  Clare replied 1 year ago.
Hi
Ok
Clare
Customer: replied 1 year ago.
Hello. I wondered if you'd been able to come up with an answer re the taper relief?? You said you would check with a colleague.
Thanks
Expert:  Clare replied 1 year ago.
Hi
She has been off but is expected back today
Clare
Customer: replied 1 year ago.

Hello - i wondered whether you have an answer re the taper relief - you were going to ask a colleague??

Expert:  Clare replied 1 year ago.
Hi
I have and the news i snot good.
May I ask - did your father have any advice about making these gifts?
Clare
Customer: replied 1 year ago.

yes. at the moment we are have been told that we have to pay inheritance tax of just under £150,00 and that it is not subject to taper relief. I sit;ll don't understand why.

Expert:  Clare replied 1 year ago.
Hi
Just to check - I meant was your FATHER given advice when the gifts were made?
Clare
Customer: replied 1 year ago.

yes - he made the gifts in consolation with his solicitor.

Customer: replied 1 year ago.

we were hoping that my father would live longer than 7 years inwhich case - had he died after March 2015 then we would have no tax to pay (hence the questions about the length of time that probate took).

but it but appears that there is nothing that we can do.

Expert:  Clare replied 1 year ago.
Hi
Was the problem of the different dates explained to him - that since together they did not use up the nil rate band there was a higher risk?
Clare

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