I note that this a fairly common topic on this forum, but I haven’t seen a post or reply that addresses my clients’ situation.
The facts are as follows:
H died in 2003 with an NRBDT clause in his will that allowed his trustees to make an interest free loan repayable on demand for his NRB to W.
The family dealt with the estate very capably, including completion an IHT200.
They did involve solicitors in 2005 to draft the deed of retirement for W who was an executor and appointment of a new trustee.The solicitors also prepared the “deed of spouse undertaking” that effectively loaned W £255k.
Clients have consulted me this year as W has sold the family home and moved into residential care. She has ample means to pay for her care fees and so the trustees have decided to call in the £255k loan and to appoint the money out to the children.
It transpires that they were unaware of the need to deal with a 41(G) or the anniversary in 2013 and so these were never submitted to HMRC. I don’t think that there is a problem of tax having not being paid because there has never been any income and the amount concerned is below the IHT threshold. However I am a little concerned that HMRC will have something to say (and possibly penalties to levy?) about the failure to register the trust and deal with the tenth anniversary. We will also presumably need to deal with an IHT100© although with the present confusion surrounding 41(G)'s and IHT100’s I’m not too sure where we stand.
Any thoughts on HMRC’s likely response would be appreciated, before I write to them.
Kitcat & Co Solicitors