Have Tax Questions? Ask a Tax Expert for Answers ASAP
According to what I can see, an expert would earn $12.59 for an accepted answer.
Thanks. That's fine by me.
Let me know what your tax question is.
I deal with IHT.
You may as well post it here.
I'll have a look at at this and get back to you. Do you know when HMRC started to query the tax avoidance scheme your late father took part in?
Some Scottish law is different to UK tax as far as tax and debt is concerned so you might look to take some local advice from a tax lawyer/ estate lawyer in relation to limitations.
If you look under Funeral and other expenses here you will read that executors cannot be held personally liable for debts they were not aware of so long as they wait until at least 6 months after the death before distributing the estate assets. HMRC can seek to bankrupt the estate but they would have no executors to sue. I have to say I am unsure whether the beneficiaries can be pursued as they can be for Inheritance Tax. I would be surprised if an adjustment to the IHT account would be allowed so long after the time limits. Nobody said tax rules were fair.
I will continue to look for guidance on tax avoidance schemes outlawed post death and HMRC's right to pursue payment of a liability which didn't exist at death. I would have thought that if the executors were aware of a scheme, they would be obligated to retain funds to settle any tax liability that may arise if the scheme was outlawed post death.
Promoters of tax avoidance schemes have been required to register them with HMRC since 1 August 2006 as you can read here which was after your father entered into his scheme.
I hope this helps but let me know if you have any further questions.
I'd be interested to know how you get on with HMRC. This has piqued my interest as there are so many schemes being outlawed many years after they were effected and I'd like to know definitively what happens if death occurs before a scheme is ruled illegal post death. I will let you know what I find.