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bigduckontax, Accountant
Category: Tax
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Voluntary disclosure for my late mother in-laws estate. She

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voluntary disclosure for my late mother in-laws estate.She went into a nursing home with dementia 2010 and died early this year and during that time her house was rented out to help pay her fees. We always know that tax would be due on this income and when we she died we reported it to the HMRC breavement team and asked their assistance in settling the outstanding debt and advising them of the amount undeclared income. We also included an estimate of the debt on the IHT accounts submission. The HMRC let property campaign responded acknowledging our letter and gave us the 90 days to prepare our voluntary disclosure and to make an offer. What we expected.I understand that five years as part of the voluntry disclosure and the sixth year as part of a self-assessment return for 2016/17 which is straight forward enough.However, as part of the disclosure we also advised the HMRC that we did not believe she had paid tax on an Irish contributory pension. We we believe she received since 1992 (she died aged 86). She was not a worldly wise person, especially in her later years as a widow and the onset of dementia, and it unlikely she would have appreciated tax was due or had the way of it to go about that. The only information we have supplied so covered the period from the 2010/17, including the pension, when the family looked after her affairs.I would like to talk to someone about how many years we would be expected to go back with regards ***** ***** pension, just 6 years or 20 years!? I also have a few other questions.One good note is that HMRC has advised us that no penalties would be applied.Look forward to hearing from youGerryThe period covered by the rental was from June 2010 to February 2017 when sRent subject to the payment of tax under the
Customer: replied 6 months ago.
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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.

Customer: replied 6 months ago.
HiThank you.My wife and her siblings are administrators (probate has been granted) and the house still forms part of her estate which they have inherited and will be sold shortly. We have no issue with the rental income back tax, but the pension is the bit we are struggle with.As part of the HMRC voluntary disclosure process, what drives the treatment of unpaid tax? the behaviour or the length of the period the tax has not been paid on the Irish State Pension. She was not worldly wise, would not have had the way of it to address the matter had she recognised it before she was overtaken by dementia. If you speak to the HMRC, they avoid giving advice on this issue. We are going back to the HMRC as part of the disclosure on the rental income for the 5/6 year duration and would not have an issue with six years for the pension which I understand would be classed as "careless". "Deliberate" and going back 20 years seems extreme for a little old lady who would not have realised that tax was due on the Irish pension. Is it simply for us to put forward the case she was indeed "careless" and offer to pay six years tax or would HMRC kick back and go for the full 20 years.Luckily we have already been advised no penalties will be applied, its simply a question of duration and whether it is legitimate to put forward a "careless case" and only provide six years on that basis.Apologies for labouring the point, but welcome your comments.Gerry

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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