In Glyne T Harris as personal representative of Helena Norma McDonald (deceased) v HMRC [2018] TC06448 a personal representative was held liable for the estate IHT; assets were transferred to a beneficiary who had returned overseas without settling the tax as promised.

The Inheritance Tax Act 1984 provides that:

  • Inheritance tax (IHT)  is charged on the death of an individual as if, immediately before death, they had made a Transfer of value equal to the value of their estate.
  • The deceased’s personal representatives (with limited exceptions) are liable for the inheritance tax arising on the deemed transfer on death.

Mr Harris was the appointed personal representative of the late Helena Norma McDonald:

  • He filed the IHT400 return, HMRC opened an enquiry and issued a determination for £341,279 of IHT.
  • The determination was upheld on statutory review and Mr Harris appealed on the grounds of insufficient funds.
    • He had released a substantial amount (possibly all) of the estate’s assets to the brother of the deceased (and a beneficiary) on the condition he settled the IHT.
    • The brother returned home to Barbados without settling the tax and Mr Harris was not able to contact him.
    • He did not appeal the amount of tax determined by HMRC.

The First Tier Tribunal struck out the appeal as having no reasonable chance of success:

  • The fact that Mr Harris had transferred the assets of the estate to a beneficiary on the basis that they would be responsible for payment of IHT and was ignorant of his obligations as a personal representative to pay the IHT was no defence.

A cautionary tale for those who have agreed to act as personal representative without being clear about their legal obligations.

Links:

IHT: Transfer of value 

IHT: Estate planning checklist 

External Links:

Glyne T Harris as personal representative of Helena Norma McDonald (deceased) v HMRC [2018] TC06448

 


 

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