Executors ordered to recover overpaid legacies to settle tax


Nick Palmer4

By Nick Palmer

In a recent case – Usher & Perkins v HMRC – two executors administered an estate of £1.5m without legal or accountancy advice. Inadvertently, they underpaid income tax and distributed the estate between 8 individuals and 4 charities.

HMRC later sought additional tax, interest and penalties. The executors accepted the tax was payable but argued HMRC should have pursued this sooner.

At the tribunal, given the special circumstances of this case, the judge cancelled the penalty but ordered that the executors remained personally liable for the tax and interest, whether or not they were able to recover this from the beneficiaries.

Administering an estate can be straightforward. However, in every estate, executors should always take advice to ensure that they are not left with a personal liability, having distributed the estate.

Nick Palmer is a solicitor in the Private Client team at Barker Gotelee.

Solicitors Ipswich Suffolk – for more information on our range of legal services, please call the team on 01473 611211 or email bg@barkergotelee.co.uk