A taxing time for the unwary

A timely reminder that an executor has obligations to discharge the deceased's debts and ensure that all tax due on an estate is accounted for and paid came in the recent First-tier Tribunal decision involving the estate of Helena MacDonald.

The personal representative, Mr Harris, duly filed an inheritance tax return with HMRC but one year later HMRC opened an enquiry and subsequently issued an assessment which was upheld on review in the sum of £341,278.26

Unfortunately for Mr Harris he had, by then, no funds to pay having distributed a substantial part of the estate to the deceased's brother 'on the understanding that [the beneficiary] would pay the estate's bills and taxes'. When the time came the beneficiary had returned home to Barbados and could not be contacted.

Mr Harris appealed, but not having the funds to pay the assessed tax was not a ground that had a reasonable prospect of success on appeal and his appeal was struck out leaving Mr Harris with a large bill to pay!

A salutary lesson and all the more reason for executors to take professional advice.