Home Money Bad HMRC advice cost me £10,000 on an inheritance tax bill: SALLY SORTS IT

Bad HMRC advice cost me £10,000 on an inheritance tax bill: SALLY SORTS IT

by Elijah
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Thanks to advice I received over the phone from HM Revenue and Customs, I ended up paying exorbitant interest, says one reader. Is there anything I can do?



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I was the executor of the estate of a friend who died in May 2021 at the age of 90. Part of my role was to sell his house.

Thanks to advice received over the phone from HM Revenue and Customs, I ended up paying exorbitant interest which I estimate to be around £10,000 on inheritance tax due, when I should not have paid any.

I haven’t even had confirmation that the total of £145,000 I handed over to the taxman in October last year was received. I have contacted them several times to try to resolve this issue but have not received a satisfactory response. I’m worried and feel like I’m being ignored. SH, Stourbridge, West Midlands

Thanks to advice I received over the phone from HM Revenue and Customs, I ended up paying exorbitant interest, says one reader. Is there anything I can do?

Thanks to advice I received over the phone from HM Revenue and Customs, I ended up paying exorbitant interest, says one reader. Is there anything I can do?

Sally Hamilton responds: You were keen to do everything according to the rules and pay all the inheritance taxes due in the rules. This tax is levied at 40 per cent on an individual’s estate which exceeds the inheritance allowance of £325,000.

The rules state that the tax bill must be paid no later than the end of the sixth month after death, if interest charges are to be avoided.

Real estate transactions can be extremely slow and if it takes more than six months to find a buyer, the payment deadline may be missed and interest begins to mount.

Since you didn’t know how long the sale would take, you decided to pay your friend’s estate tax in installments. This system, set up by completing an IHT400 form, allows payments to be spread over ten years, even if interest is accrued over the entire period.

This arrangement can be practical for someone who has inherited a property, wishes to live there and has no other source of funds to immediately pay the entire tax bill, but can pay the installments.

To your surprise, your friend’s house sold faster than expected – with the transaction finalized about four weeks before the end of the six-month grace period.

You alerted HMRC in November 2021, shortly after the sale, and told them you wanted to pay the entire inheritance tax bill of around £135,000 straight away to avoid interest.

This is where things went wrong, because the woman on the helpline told you not to worry and to continue paying the annuities. You found this strange, as you had all the funds available, but you accepted it.

Over the next two years, you paid installments but, unfortunately, you never received a receipt or statement showing how much you still owed. You were worried that you might be the victim of a scam.

When you called the IRS again to express your concerns, you finally found someone who told you that you should never have paid in installments since the property had been sold. You requested a statement, but only received a letter stating the current interest rate of 7.75 percent.

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Can Sally Sorts It help you?

Do you have a consumer problem for which you need help? Email Sally Hamilton at sally@dailymail.co.uk – include telephone number, address and a note to the offending organization giving them permission to speak to Sally Hamilton.

Please do not send original documents as we cannot take responsibility for them.

No legal responsibility can be accepted by the Daily Mail or This is Money for the responses given.

In desperation, you decided to pay what you estimated was the balance of the bill as of October 25 last year, a total of around £145,000. Again, no confirmation.

In January, you were at your wit’s end and contacted me.

I have asked the Ministry of Finance to investigate what went wrong and remedy the situation quickly. A few days later he confirmed that all payments had been received, but added the ominous comment: “All appropriate interest has been paid on the estate.” This was concerning because no interest was owed. I asked the tax authorities to re-examine the situation.

This time a spokesperson came back to confirm Revenue’s error regarding the advice you received, and that your installment plan should have been canceled before it even started and interest should not have been charged be paid.

It took more effort, but finally last week you got back the overpaid plus interest – a total of £10,111 – along with an apology and a goodwill gesture of £150.

As a thank you for my intervention, you have kindly donated £100 to the Marfan Trust, a charity I support.

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I paid £45.70 for two train tickets from London Euston to Manchester Piccadilly. My outbound train was supposed to leave at 10:19am but it was canceled and I was told to take the next train, at 11:19am. The station staff told me I could request a full refund, but I only received 50% of the ticket price. DI, London

Although the second train left at 11:19am, it arrived at Manchester Piccadilly just 45 minutes after your original train would have, so you are not entitled to a full refund.

I paid for my accommodation in Thailand with Vrbo. It was canceled the day before we arrived – we booked another one but were told that if no one gave us check-in details on the day it would be cancelled. So we booked another hotel but I still spent £650 on temporary accommodation before we checked in.

CG, by email

Vrbo says it’s glad you were refunded by both hosts. He will refund you £650 after repaying the previous £247 he was offering.

I transferred my late wife’s savings to the wrong savings account because I had used an old account number. The money was paid into someone else’s account and they have not responded to the mortgage company’s request for reimbursement. I know it’s my mistake, but please help me.

AK Lancashire

You received the £2,000 you transferred and a £200 goodwill gesture.

I discovered that a payment had been taken from my credit card for a streaming subscription but I don’t have one. The platform indicated that there was an account opened in my name with a Russian email address. My bank said they could only hold payments for 13 months and the streaming service said they couldn’t take any action.

DS, Glasgow

You have been refunded the subscription payment and the platform has taken steps to stop the activity.

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