In the case of Evans v HMRC [2014] TC03759, an adviser became liable to an Inheritance Tax (IHT) penalty for failing to submit accounts for IHT purposes.

Section 216 IHTA 1984 provides that within 12 months of the death, the personal representatives of a deceased person and every person who is liable for IHT as a result of the death, be that a chargeable lifetime transfer, a Potentially Exempt Transfer (PET) which becomes chargeable or as a trustee or trustee of a life settlement must deliver an account to HMRC for IHT.

Section 245 IHTA provides that a penalty of £100 arises if there is a failure to deliver accounts and information under s.216.

  • A further liability may be agreed by the tribunal from the date of the hearing of an amount not exceeding £60 for each day that the failure continues until the accounts are delivered. 
  • A further £100 penalty is the accounts are six months late.
  • If the accounts are more than a year late the penalty may increase to a maximum of £3,000.
  • The penalty may not be more than any tax due.

Mr Evans had been appointed joint trustee to a life settlement that had been created in the 1970s. By the time that the life settlor died in 2010, Mr Evans was the sole surviving trustee. He failed to submit accounts as required by s.216. HMRC assessed that there would be some £22k of IHT due and some £66k of assets within the estate. It applied for penalties under s.245.  

The judge calculated that Mr Evans was probably over 70 years old. As he did not attend the hearing or answer any of HMRC's letters he suggested that HMRC send a representative to visit his address.

The tribunal agreed £200 of fixed penalties plus £60 per day from the date of the decision.


A cautionary tale for advisers: we age with our clients!

External Links

Evans v HMRC [2014] TC03759

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