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TonyTax
TonyTax, Tax Consultant
Category: Tax
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I am executor for mothers estate and she passed away last July.

Resolved Question:

I am executor for mothers estate and she passed away last July. Trying to wrap up distribution of assets and DWP are claiming back tax credits which she has had over the period 2005 - 2013. She had a willed legacy from her former husband of 36,440.00 and made a claim on the estate, and was awarded 75,000 to help pay for a new bungalow. She then income from the trust in the form of 3 single payments totalling @35,000 from 2007-2009. She then had a regular income from the trust from 2009 to 2013 of 450.00 per month.
Can DWP consider her legacy and claim for 75,000 as income when they recover the credits?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

I am taking a look at this for you now. It will take a while for me to draft my reply so please bear with me.
Customer: replied 3 years ago.

Tony

DWP have sent me final demand otherwise they will make assessment on overpayments. I sent them all her bank account details and they are questioning the large amounts transferred into her account.

I have only just received this income info from the estate wind up solicitor, but wondering if I am giving DWP too much information

Martin

Expert:  TonyTax replied 3 years ago.
Hi again.

THE DWP are within their rights to rclaim overpaid tax credits.

Capital payments from deceased estates and trusts are not income for tax credit purposes. Income payments from deceased estates and trusts are income for tax credit purposes. You will probably have some difficulty getting the Tax Credit Office to appreciate the difference in the nature of the paymants your late mother received and may need to have the solicitor involved in the administration of the estate to write to them and to give them chapter and verse. Unless the TCO is taken on head on and given back up information, they are like a runaway train and will carry on pursuing payment.

Take a look here for information on what counts as income for tax credit purposes. The defintion of income for tax credit purposes is basically what your mother paid tax on. She won't have paid income tax on capital payments made to her from the estate or the trust.

If I were you, I'd pay the solicitor to handle it. Their letters will carry weight with the DWP. What you need to sort out between you is whether the payments to your late mother constituted income or capital.

I hope this helps but let me know if you have any further questions.
Customer: replied 3 years ago.

Tony

A few more questions:

I have disbursed some of the funds to my siblings (30K each) and held back 30K for the DWP. The info I have is a letter headed statement of interim estate accounts dated to April 2010, and from Shoosmiths of Northampton who are very high cost so I don't want to use them again.

Would another solicitor be as good to use ?

DWP gave me a deadline to get back by the 14th Dec, would it be better if a solicitor or myself requests an extension to this ?.

Wouldn,t a tax advisor be as good as a solictor ?

Expert:  TonyTax replied 3 years ago.

As long as a solicitor has the relevant documentation you don't need to use the expensive one you used previously.

As I said in my previous post, a solicitor's letter will carry more weight with the DWP.

If you have an accountant or tax adviser, they could deal with it but, however you do it, the DWP will need to see the documentation. As long as you keep them informed, they should give you some time to sort the documentation out

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