Those of you who follow this blog will recall that Mrs L died of bowel cancer just over two years ago. My, how time flies. But I miss her as much now as I did then. Not a day goes by that I do not think of her and ask myself what she would think about something. My recent decision to qualify to deliver the DVSA’s Enhanced Rider Scheme is one she would have enthusiastically endorsed, for example. I’m not sure how she would have received my decision to buy a Yamaha Tracer, though… And I certainly expect some ghostly eyebrows to be raised at my interest in the new Harley Davidson Bronx.
Anyway, I digress. Here we are, two years on and I receive a letter from HMRC demanding £425 of underpaid tax for Mrs L from tax year 2017/18. Apparently, they can go grave robbing some four years after death, which I didn’t realise.
My immediate thoughts – apart from the obvious distress – was that how could they expect me to take responsibility for her tax affairs given that I was not when she was alive? Then I thought that as she was on PAYE, how is there this discrepancy?
Further analysis of the demand showed that she had underpaid tax on her business car during the year 2017/18. She gave the car back in the September of that year, so only had it for half of the fiscal year. But, again, she was on PAYE, so how come the discrepancy?
There followed an interesting telephone conversation with a woman in HMRC’s bereavement department. When Mrs L handed the car back, her employer completed a P11D (Benefits in kind) form. This went to HMRC in the December and her tax code was adjusted accordingly. Apparently, this then meant that across the whole tax year, she underpaid and this came to light when a second P11D was submitted in July 2018.
Now, had they sent a demand at that point, shortly after her death, I was still sorting out bits and pieces of her affairs, so would have settled it without much quibbling – once I had established that it was correct, which, it appears, it is.
However, two years down the road, there is no estate to speak of. Sure, I was her only beneficiary and her pension lump sum still exists, but that estate – what there was of it – is now mine and how can I be held responsible for someone else’s debts? What would they have done had the money gone to siblings and nieces and nephews?
The woman I spoke to explained that they wrote to me because I was her representative. I was not, however, responsible personally for her debts (sigh of relief – Ed). If there was no money in the estate, then they would have to write it off, but they were obliged to seek the money as a matter of course.
Therefore, I was faced with a choice – write a cheque and clear the outstanding amount, or decline to do so on the grounds that Mrs L’s affairs, having been resolved two years ago, means that there is no money with which to pay.
I leave it to you to figure out my formal response to HMRC…
Bear in mind here, that they owe me over £6k from last year when I overpaid and I am still waiting. Had I been keeping them waiting, they would have penalised me by now.
Tell them to send you £5575 and you’ll call off the solicitor.
Don’t net it off – keep the two issues completely separate.
Or rather, tell them you’ll discuss any claim they may have against the late Mrs L only once they have repaid you in full.
There was also a story of a really big estate – a Duke or something – that was facing a massive IHT bill. The estate was similarly complex so there was a lot of to-ing and fro-ing with HMRC. They strung the whole thing out by noting exactly how long HMRC took to respond to any given letter and ensuring that they replied exactly 1 day quicker. Took them 17 years to settle the estate. 🙂
So if it’s taken them 4 years to write to you, tell them you’ll look into in 3 and a bit years. 🙂
(p.s. Bastards)
Who was the executor of the will? Its their responsibility to deal with HMRC and any creditors to the estate.
That’s me, but as they said, once the estate has been distributed and there is no longer any money, there’s nothing with which to pay them. All debits and credits were sorted out by the end of 2018.
As I mentioned, the second P11D, had it been brought to my attention at the time, would have resulted in payment as it was within a reasonable timescale. The law may allow them to chase up to four years later, but it’s hardly a reasonable timescale. What is the executor supposed to do? Keep a pot aside in the possibility that they have overlooked something and come knocking?
As an aside to this, my conversation seems to have shown that they recognise that a spousal death is fairly straightforward regarding the estate, which this one was, but it no longer exists once that process has happened and I am not personally liable for her debts.
Did you advertise in the London Gazette, asking for any creditors to come forward by a certain date? Thats what is advised, then if a credior shows up afterwards they’re out of luck. Not sure if that applies to HMRC though, the State has a way of giving itself special rules that don’t apply to us mere mortals.
No. That’s because there were no debts that I didn’t know about. The death was notified in the local press.
Yes HMRC have dispensation to chase for up to four years. I was fairly resigned to paying up. It was they who made the point that after this time lapse, if there is nothing left, then they will write it off. That seems fair enough to me.
Tell them to send you a cheque for £5575 and you won’t take the matter any further.
Definitely eyebrows at the Harley Bronx. You are doubtless aware that Harley’s are hugely desirable and theft is one reason why insurance premiums are eye watering.
This one Is hugely desirable for me. I’ll be taking a test ride when they hit the showrooms.
On the theft front, as I’ve discovered to my cost, the same applies to beemers.