In Hutchings v HMRC [2015] TC04421, the main beneficiary of a deceased taxpayer received a tax penalty for failing to disclose for Inheritance Tax purposes a gift made from his dead parent’s undisclosed Swiss bank account. This is the first case under this legislation.

Robert Hutchings made a gift to his son, Clayton, from an undeclared Swiss account containing over £440,000. He died within seven years of making the gift and Clayton failed to declare the gift to his father’s executors. Clayton also failed to declare interest earned on his own Swiss bank account.

The executors filed form IHT400 and HMRC, after receiving details of both offshore bank accounts, assessed Clayton for a penalty under Paragraph 1A, Schedule 24, Finance Act 2007 'error in taxpayer's document attributable to another person'. 

HMRC decided not to penalise the executors as the error was not attributable to their actions.

The First Tier Tribunal (FTT) found that Clayton intentionally did not answer the executors' questions on gifts and that this was with the intention of their IHT400 return not containing the information (as he intended the gift to him to be unknown to HMRC).

The penalty was confirmed.

The legislation: error in taxpayer’s document attributable to another person.

(1) A penalty is payable by a person (T) where:

(a) another person (P) gives HMRC a document of a kind listed in the table in paragraph 1 [this includes IHT forms]

(b) the document contains a relevant inaccuracy, and

(c) the inaccuracy was attributable to T deliberately supplying 15 false information to P (whether directly or indirectly), or to T deliberately withholding information from P, with the intention of the document containing the inaccuracy

(2) A ‘relevant inaccuracy’ is an inaccuracy that amounts to or leads to

(a) an understatement of a liability to tax,

(b) a false or inflated statement of a loss, or

(c) a false or inflated claim to repayment of tax.

(3) A penalty is payable under this paragraph in respect of an inaccuracy whether or not P is liable to a penalty under paragraph 1 in respect of the same inaccuracy.”


Paragraph 1A, Sch 24 was designed to achieve exactly this result. It sweeps up cases where a tax return is completed by someone other than a taxpayer. Although the executors of the deceased's estate are responsible for the filing of the IHT400, they are only able to return information provided to them and if that information is withheld or is deliberately misreported the penalty applies to the person who provided the incorrect information. 

Useful guides on this topic

Penalties: Errors in Returns and Documents
What penalties apply if you make an error or mistake? Is there a penalty if you fail to tell HMRC about an under-assessment? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

Adviser's Tax Penalty Planner
A guide to the key direct and indirect tax penalty regimes for returns and payments, excluding VAT.

External link

Hutchings v HMRC [2015] TC04421

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