An analysis of all the facts and circumstances surrounding the gift of £300,000 including contemporary statements of involved parties and their likely admissibility. Individuals in a family context can be genuinely vague about such matters and do not even consider taking professional advice. The outcome is likely then to be determined by arid legalistic principles applied retrospectively. Executors in this position would prudently be now advised about these and bear in mind that as regards HMRC full disclosure is even more prudent based on that advice and that every point in HMRC’s favour will be advanced, not least bad ones.
If there is no acceptable evidential basis for the “loan” or its “repayment” there must be a very strong possibility of a gift and gift back. I once persuaded HMRC to accept that a family company’s controlling shareholding should be valued with underlying loans off its published balance sheets. The company had been incorporated from a partnership where they were clearly on balance sheet and never repaid or exchanged for shares. This incorporation had been done DIY with documentation from precedents in Exchange and Mart or similar. It followed of course that thereafter for tax if not other legal purposes the company still owed the debts.
If there was originally a loan it cannot be forgiven in law without due formality viz a deed, a point HMRC can and do take (when it suits them!).
Advisers beware executors with poor fiscal hygiene. Some suffer from the “Fred Syndrome”. " How many properties do you have, Fred?". " How many should I have, Jack?" Heart sinks. Retainer terminates.
Jack Harper