Personal Representatives can be personally liable for Inheritance Tax
  • 9th Oct 2018
  • Article written by Hannah Durston
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The First-tier Tax Tribunal provided a valuable reminder in the case of Harris v HMRC [2018] UKFTT 204 earlier this year that, with limited exceptions, personal representatives are liable for Inheritance Tax arising on a deceased’s estate. In this case, the personal representative released a substantial proportion of estate funds to the residuary beneficiary on the understanding he would settle taxes and other debts owing. The beneficiary then became uncontactable and the personal representative appealed against HMRC’s review decision that he was liable to pay the taxes and debts (he appealed on the basis he no longer possessed sufficient estate funds to discharge the liability), and the Tribunal held the appeal had no reasonable prospect of success. The Personal Representative will have to discharge the liability himself personally as a result of his actions.

Personal representatives should be reminded to ensure that funds are made available from the estate to meet Inheritance Tax and other liabilities arising, before making distributions to beneficiaries. Acting as a Personal representative comes with many legal obligations which proper legal advisors will be able to ensure are discharged and on the right advice, lay personal representatives will have the peace of mind that they will not find themselves liable for costs that they did not anticipate.

Contact our Tax and Estate Planning department for more information on the role of personal representatives in an estate administration here.