An executor approached a Solicitor who prepared IHT400 for her. The Solicitor has now retired. She has asked me to prepare probate application.
HMRC have sent their letter with a code to apply for probate on myHMCTS. HMRC tell you within their letter the gross and net values of asset figures which you need to submit when you make the probate application.
Since submitting the IHT400 the executor has discovered one or two other reasonably minor items; there is another £500 or so tax payable as a result.
Just wondered if anybody has been in the situation. My instinct is to calculate myself what the revised figures should be and include these within the probate application but I wanted to check whether it is likely to cause some issue with Probate Registry (do they receive some info from HMRC which will hold matters up if there is discrepancy)? Or, is it unlikely to matter.
My understanding is that HMRC expects the IHT400 to reflect the known assets/liabilities/values as at the date of submission, failing which it reserves the right to levy penalties for inaccurate disclosure.
As the changes have become known after lodging the iHT400, I suggest the changes might be dealt with via a letter and lodgement on account (and included in any subsequent corrective “account”).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
There is currently a widespread public delusion that a free country permits an individual to award themselves a personal exemption from rules and norms which other people observe. Others are just catastrophically naive. In this case the criminal law lurks and hovers: tax evasion is a crime. Failure to report the newly discovered tax liability is a criminal offence. If the client instructs a professional adviser not to report it, the adviser should sack the client. Inspector Knacker is too busy policing tweets but the SRA, the Angry Minotaur of The Cube, is eternally vigilant and assiduous in depriving solicitors of their means of livelihood, with a single-minded ferocity that would have been approved by Reinhard Heydrich.
When advising, as I often did, those exhibiting severe symptoms of poor fiscal hygiene under the seal of the confessional (LPP) I was often asked “how will they find out?”. I marvelled at the resourcefulness of HMRC in doing just that. I tried to convey to such people (who only then became my clients by a commitment to full disclosure and a firm purpose of amendment) what a tremendous ordeal it is for the taxpayer and their family to endure the cost and attrition of their physical and mental health from being subjected to a relentless investigation by HMRC. No one would ask such a fatuous question as the above if they had been able to see what might be in store for them if they got the percentages wrong. HMRC do not operate a de minimis scope test where a professional is involved. Lawyers who practise civil law often do not have their antennae tuned into potential crimes by clients but in tax practice it is never far from one’s mind. Also not even LPP assists the non-client or ex-client who finds that his lawyer is compellable to graphically attest to his mens rea.
With respect to the above very learned posters - I don’t think this is what the OP was asking and I don’t think there’s any proposal that the tax due will not be paid.
The issue, as I see it, is that the executors have declared a gross/net value of the estate to HMRC, lets say both are £500,000. HMRC have issued a Unique code which specifies that the Gross/Net value of the estate is £500,000. They’ve subsequently discovered £500 extra.
The question is if they submit a probate application showing £500,500 this will conflict with the figures on HMRC’s unique code letter and cause an issue? In the meantime I’m sure the executors will write to HMRC and advise of the extra £500 and pay the tax, but this doesn’t cause the re-issue of a new unique code showing the updated estate value.
In my experience, we recently had a similar case where HMRC had actually put the wrong figures on the Unique Code Letter, despite processing the tax correctly on the computation. We applied for probate with the correct numbers and it was granted with no issues. As such, I think you can still apply using that code and the updated figures, although I guess there’s a possibility that the probate officer might raise a query (which you can answer very easily).
It looks like HMRC is not being overly careful when quoting the gross and net values for an estate when they are providing the unique code for the probate application. I have just received their letter and the figures are more than double those Included in the IHT 400 which I submitted. I have put the correct figures in the online application and included a note in the box at the end. I have also sent a letter to HMRC pointing out this and asking them to confirm the correct figures to HMCTS, so that hopefully it won’t hold up the issue of the grant.
Like Patrick, I too received a letter with a code from HMRC where the figures for the gross and net estates were incorrect, as HMRC had transposed two of the digits in the figures. It was a non-UK domiciled estate where the deceased owned a significant portfolio of UK securities and had no UK debts, so the values of the gross and net UK estates were the same. Instead of saying that the estates were (say) £645,333, HMRC said that they were £465,333. I too put an explanatory note in the appropriate place in the Probate Application form and sent HMCTS a copy of the relevant page from the IHT400. I also wrote to HMRC to point out their careless error.
Thank you for all of your responses. I should of course have made clear that the additional tax due was paid as soon as the extra items were discovered. Furthermore, a Corrective Account was also filed. It is simply whether it will create any problem with issue of the Grant and your responses suggest probably not. In any event, a note was included on the Probate application portal so hopefully no delays will arise.