Wills & Probate | What happens when IHT is underpaid?
The probate and inheritance tax topic is not as straightforward as many seem to believe.
There are many families that either do not believe that inheritance tax (IHT) is payable or try to find ways to attempt to reduce the value of assets or gift assets to try to avoid paying inheritance tax (IHT). I have written an article recently on the same topic about HMRC locating families that underpaid inheritance tax (IHT) and yet another news article has caught my eye where circa £608m has been issued to families who have not paid enough IHT.
The amounts owed are significant and a very clear indication of how complicated it really is to deal with inheritance tax.
Many choose to undertake the probate of a loved one themselves, however, many end up in a tangle whereby the relevant forms are not completed correctly and which can lead to an incorrect amount being paid to HMRC.
If the amount paid was too low, HMRC will no doubt investigate and, not only will you need to find the remaining monies to pay the correct amount, but I am sure HMRC will also seek interest on the amount due.
An estate cannot be rushed and you must ensure that everything takes place in the correct order, that you locate all assets and creditors, the correct amount of IHT is paid, and, finally, that the estate is distributed accordingly.
Do not get caught out and make sure the probate is undertaken properly. Only you, as an Executor, will be liable.
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The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.