Inheritance tax penalties apply if you fail to declare gifts

HMRC has issued an £87k penalty on a beneficiary who failed to declare a gift from his father.

Clayton Hutchings received the gift a year before his father died, and as such it became relevant for calculating inheritance tax. The professional executors made reasonable checks for gifts and did not find out about the gift to Clayton.

After an anonymous tip-off HMRC was alerted to an offshore account which Clayton held. HMRC then found out about an offshore account which his late father had held and then identified the gift to Clayton.

Clayton tried to blame the executors. However, the Tribunal held that the executors had acted reasonably and did not impose a penalty on them as they could prove they had asked Clayton in person and in writing about gifts.

Nick Palmer is a lawyer at Barker Gotelee, Solicitors in Ipswich.

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