We’ve elected to pay instalments on D’s property which was up for sale by auction. The auction failed to realise the reserve price and the sole beneficiary (B) now wishes to have the property transferred to him. Outstanding IHT is approx £42,000 (payable by instalments over the next 8 years). B was born in the UK but has been resident in Australia for many years. He has come to the UK for approx one year to deal with his own father’s death (not D above). Does B need to pay the entirety of IHT due before we transfer the house to him? If not, and if he fails to pay the IHT each year, will HMRC revert to us for payment? HMRC Helpline has not been helpful. Your trusted advice is welcomed!
The executor is personally liable if they have released the property whilst there is IHT outstanding.
You could take a charge over the property to cover the tax and interest that wil become payable, but can you be certain it would sell when the monies had to be paid.
Ideally the you might encourage the beneficiary to pay the outstanding tax now, or put you in funds now to pay the instalments as they fall, a-wing for the fact the the rate of interest on the unpaid tax wil undoubtedly increase so alow is healthy margin.
Paul Saunders
Independent Trust Consultant
Many thanks for your response, Paul. I had asked the beneficiary to put me in funds to pay the IHT, but wondered if there was an alternative route.