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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I signed up to the Just Answer month trial, as I had a

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I signed up to the Just Answer month trial, as I had a specific question about my washing machine. That's been dealt with, and I believe I have 2 or 3 "free" questions left. How much to the experts who answer my questions get remunerated, not including whatever extra I may pay?
I don't really have anything else I need to ask, so I don't want to waste people's time, but if it earns them something, then I could probably think of a tax question that would be useful to me.

According to what I can see, an expert would earn $12.59 for an accepted answer.

Customer: replied 1 year ago.
Ok. Thanks. So if we say this question is answered, you'll have earned $12.59. I'm sure that will be a fraction of whatever hourly rate you could earn, but if they are all easy ones like this, then they'd soon mount up. Cheers.

Thanks. That's fine by me.

Let me know what your tax question is.

Customer: replied 1 year ago.
It's a UK inheritance/tax disputed tax return issue. Is that something you know about?

I deal with IHT.

Customer: replied 1 year ago.
are you happy to do it in this question, or mark this one as done, and for me to submit a new question with my actual tax question.

You may as well post it here.

Customer: replied 1 year ago.
OK. My father died in 2007. Though my brother and I were not originally executors, we became executors when one of them declared a conflict of interests, and the other (once everything seemed to be tied up) just thought it would be easier if my brother and I were the executors. There were several beneficiaries in my Dad's will, and brother and I were residual beneficiaries. We had a solicitor (we're in Scotland) and Dad's accountants did his final tax return.
I think the IHT payment was about £80K. There was one unknown, in that last tax return the accountant reckoned he was due a rebate of about £10K, but it is was witheld due to some outstanding issue. Why no one chased up this outstanding issue, is the frustrating thing.
Anyway, years later (about 2010/11) I started getting letters from HMRC to setting my fathers outstanding tax bill from 05/06. A return that he filed when he was still alive. Some more chasing on my behalf discovered he'd taken part in some "tax sheltering" scheme, which HMRC were now disputing its legality and it is still going through the courts. Had we known about this at the time, I think we'd have just paid it (even though the court may go in the schemes favour) just for peace of mind.
Anyway, so my question is, this tax liability is for about £50K!! (I only discovered this last year).So the actual question(s):
Can HMRC still pursue Dad (us as executors) for this cash? I assume they can.If we finally have to pay it, will we be able to claim back some of the original £80K IHT, as the estate was effectively over evaluated by £50K.?Thanks,

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?

Customer: replied 1 year ago.
No. I don't. I'd have thought it was after his death. The scheme was called "Excalibur" sold by Premier Strategies, I believe Tenon Accounts had something to do with it (they did Dad's tax). We were unaware of it until a year or two after his death.
PS there's no rush.

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.

TonyTax and 2 other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thanks, ***** ***** There was certainly no HMRC paperwork relating to Dad's 06/07 (I've just rechecked the last letter I had from them, I was a year out originally) tax or mentions of Excalibur until easily a year after his death. I remember that the solicitor was concerned that nearly a year had passed before we finally wound up the estate and paid out all the bequests. The only thing was the withheld over payment (according to the accountants) for his 07/08 tax. He died October 07. He knew he wasn't well, and that the operation that he was undergoing would be risky, but he never mentioned anything about his tax, mind you he didn't talk to us (or his estranged 2nd wife) about any of his finances. It was quite an eye opener when we had to look into his estate. I'm still in occasional contact with the solicitor that dealt with the executry, and since I first informed him about these letters from HMRC, he has never suggested that it might be something that we wouldn't have to worry about.
Thanks again, Neil.

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.