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Hello, Gerry I can't do phone calls at present as I am answering you from Germany where I am temporarily located.
The first point to make is that you have no personal liability in this matter. It is a subject for your mother in laws executors or administrators. If her eatate is insufficient to meet any tax due then HMRC, not you, dips out. It is normal just to go back 4 years, for careless behaviour 6 years and deliberate ditto 20 yuears though technically they can go back indefinitely. As she has lost the place, as we say in Scotland, HMRC are unlikely to be able to sustain more that the 6 year limit.
I do hope that you have found my reply of assistance.
Yes, the State Pension (SP) is unfortunate as it is taxable, but paid gross, presumably on the assumption that the recipient has no other income and thus not subject to Income Tax (IT) anyway.. HMRC are driven by an intention to extract as much tax as possible and it is policy to browbeat the smaller entities as tangling with the big boys with their armies of expensive accountants and laywers is an exercise in financial futility. It is all done in the hope that the recipient fo their demands will just roll over and pay up. I should simply push for 4 years as the deceased had lost the place. Even HMRC do not want the negative publicity that pursuing an old lady or her estate in such circumstances would attract. The fact that HMRC have advised that no penalties will be applied is playing right into your court.
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Thank you for your excellent support.