I have been asked this question by the executors of an estate. The deceased owned a rental property and they want to submit a tax return now for the period from 6/4/18 to date of death, so that they can settle the tax and move forward with probate. They tried asking HMRC who were no help, and I can’t find the answer either. Obviously they could wait till 6 April 2019 but they would prefer to do it sooner.
This can’t be an unusual situation, so I guess there must be a way of doing this?
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Yes.
Prepare the tax return as a paper return and then submit it. Put highlighter pen on the 2018/19 so that it is processed for the correct year.
Yes - not sure if you can actually get a 2018/19 return yet but I've used one for the current year in the past and written "read as 20xx+1 throughout" across the top.
Strictly, you're acting for the executors now so you should get a new authorisation, new letter of engagement etc etc. Personally, I try not to make the admin top heavy for what is by definition a one-off job but much depends on the complexity of the return. With a straight up and down return for a director with just salary and dividends, I might ask the executors to sign an agreement that we run on the same terms as the director's LoE. It's a difficult time for them. No need to make it harder.
Yes, you can do it now. You normally get a paper return from HMRC specifying the dates it’s to be completed for.
I've just dealt with exactly this situation and HMRC issued a paper return with remarkable speed!
Why is the submission of this tax return affecting the application for probate? Or is this just poor wording?
Yes - doesn't need to be submitted but you need to have a reasonably accurate estimate of the liability.
I've dealt with several deceaseds' final year income tax returns (but not in the last couple of years). You could ask the executors for their correspondence received from HMRC after the death was registered, which will include request for income until date of death. It doesn't look like the normal paper tax return.
The two estates I am currently dealing with both had estimates (mine - £100 refund each) which have been used for probate neither of which caused HMRC and problems. If the estate is chargeable to IHT then once you have the correct figures. The executors should complete and file a corrective account as soon as possible to avoid interest. it has taken a year to complete one because copllecting the data from pension providers has been a nightmare.