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JGM
JGM, Solicitor
Category: Scots Law
Satisfied Customers: 11419
Experience:  30 years as a practising solicitor.
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3 years ago, myself and 7 other beneficiaries inherited £27000

Customer Question

3 years ago, myself and 7 other beneficiaries inherited £27000 each. There was inheritance tax due but it was not paid by the executor. Now the taxman has asked each of us for £63000 jointly. I am happy to pay my one eighth share to the taxman but know other beneficiaries will not be as forthcoming. I am worried the taxman will come after me for more than my share of the tax. If he does, how likely am I to be successful in defending myself against paying more?
Submitted: 2 years ago.
Category: Scots Law
Expert:  JGM replied 2 years ago.
Thank you for your question.
Why did the executor not pay the tax?
Customer: replied 2 years ago.

My uncle died 12 years ago, at the time the executor paid inheritance tax but the estate passed to my uncle's widow. The HMRC sent the tax back to his widow. The executor did not realise this had happened, so when she died three years ago, the executor paid the money my uncle left to the beneficiaries without paying the tax (as he already thought it had been paid).

Expert:  JGM replied 2 years ago.
I presume that is also the reason the executor managed to get probate.
The executor is primarily liable to HMRC so they can't pursue the beneficiaries on a joint and several basis. At best they can only ask you for the proportion of the tax attributable to your share of the inheritance. Even that is doubtful in my opinion as there is no liability to HMRC on the part of a beneficiary in these circumstances. The circumstances whereby a beneficiary is liable for IHT are limited.
See http://www.hmrc.gov.uk/inheritancetax/paying-iht/who-pays.htm
JGM and other Scots Law Specialists are ready to help you
Customer: replied 2 years ago.

Hi again


looking at the letter from HMRC it says I am liable under section 200 (1) (c and d) of the inheritance tax act 1984. How does this sit with the info you gave?


Regards


Jeremy

Customer: replied 2 years ago.
Relist: Other.
I remembered about a reference to the inheritance tax act after I received my answer, so would like this information to be taken into account.