Executor personally liable for inheritance tax
In Glyne T Harris as personal representative for Helena Norma McDonald (deceased) v HMRC (2018) a personal representative has been held personally liable for the inheritance tax (IHT) payable by the estate of the deceased.
Mr Harris had filed an IHT account with the Revenue which subsequently deemed that £341,279 of IHT was payable. This determination was upheld on statutory review and Mr Harris appealed on grounds of insufficient funds.
Mr Harris had released a substantial amount (possibly all) of the estate’s assets to the brother of the deceased on the condition that the brother paid the IHT. The brother however then returned home to Barbados without paying the tax and Mr Harris has been unable to contact him since.
The Court held that the fact that Mr Harris a) had transferred the estate assets to a beneficiary on the basis that the beneficiary would be responsible for the IHT payment and b) was ignorant of his obligations as personal representative to pay the IHT, was no defence.
Personal representatives should be reminded to ensure that funds are made available from the estate to meet inheritance tax liabilities (and any other liabilities), before making any distributions to beneficiaries.
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