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probate/death of a client

Have prepared the 2010/11 personal SA return but client has passed away before filed.  I am dealing with the Executor and will be preparing the final tax return to date of death.

I assume that until probate is final, all assets (including bank account) are frozen.  What happens with the 10/11 return, do we file and if not paid by 31 Jan 2012 it will accrue interest as normal - or do different rules apply because of the death?  Want to ensure that client (now executor) doesn't receive penalties because they have held back due to probate.

If someone has been through this process a heads up would be appreciated.

PS Executor has signed new 64-8! 

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Depends on date of probate

Any liability is deferred until 30 days after probate is granted.

Similarily, until Executors are appointed there is no-one capable of approving the return

 

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would suggest

That you write to HMRC advising that your client has passed away and that if probate has not been granted tell them. It probably wikk not stop penalty notices from being issued but there will be reasonable excuse ( remember death is the ultimate tax planning tool!). There is also a mechanism for writing to HMRC for confirmation ( or otherwise) that they do not wish to enquire into the returns in question so that the ececutor does not have to wait for the enquiry window to close automatically before winding the estate up

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Why wait for probate?

You have an executor under the will.  He is the personal representative of the deceased client.  He can approve the 2010/11 tax return.  File it by 31st January.  It would be daft to delay and incur penalties.

Here is some HMRC guidance.

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As always

you are right Euan BUT I read the OP to mean that probate was not yet granted and therefore there is at present no competent person to sign any of the returns

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What probate means

I agree that the OP has implied that probate has not yet been granted and my answer assumed that.

I have always understood that the grant of probate gives the executor the right to distribute the deceased's assets after paying off his outstanding liabilities.  I accept that the executor could not settle any tax liabilities of the deceased until probate has been granted, but my view is that there is nothing to prevent the executor appointed under the deceased's will from filing a tax return in the meantime.

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My understanding

of the legal position is that the Executor might be appointed under the will but he ( or she) has no legal capacity to act until the Court has granted probate. In a recent case we have had HMRC seemed to accept this.

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As soon as will is established and the Executor/Personal Representative has been identified returns can be signed and submitted. Deadlines are extended to accomodate this from a penalty point of view but the computer may well still issue paper that needs to be appealed.

Once the probate is granted you are in a position to settle liabilities so if that is later than the usual deadlines you have 30 days from probate to fulfill your obligations if you can - see balow

http://www.hmrc.gov.uk/sa/pay-deceased.htm 

extract:

If you don't yet have legal authority to settle the estate, interest will be due on any tax that's paid late from the later of:

the due date for payment30 days from the date of the grant of probate, letters of administration or confirmation

If this applies, you'll need to ask the Tax Office to reduce the interest.

If you can't pay all the tax because it's more than the value of all the goods, property and cash owned by the deceased when they died, you won't have to pay the difference.

You don't have to use your own money to pay any tax that can't be paid by the deceased's estate. Please contact the Tax Office shown on the tax bill if you think this applies. 

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thank

Thank you for your comments.  It was the status of the liability I was unsure on.  

Executor is now in place but was reluctant to submit due to accounts frozen (at that time), I was nervous of holding out in case of missing the filing deadline (which should now be academic as it will be submitted in time).

HMRC have been written to so will be aware of the deceased status.

Thanks very much for sharing.

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