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Home | News & events | Legal updates | Seek professional advice to avoid tax form filling penalties
Seek professional advice to avoid tax form filling penalties
17 September 2009
HM Revenue & Customs (HMRC) has introduced a penalty regime for inaccuracies in tax returns and other tax forms.
It covers forms submitted with every application for a Grant of Probate.
Inheritance Tax forms have to be completed by personal representatives (PRs) when applying for a Grant, irrespective of whether any tax is payable or not.
PRs must show they have taken ‘reasonable care’ when completing the forms, including:
- following HMRC guidance
- making enquiries of asset holders
- giving correct instructions to valuers when valuing assets
- seeking advice if unsure
- following up on inconsistencies in information they receive
- specifying if any estimated values are included on the form
If reasonable care is not shown by the PR, and an inaccuracy occurs that leads to an understatement of the deceased person’s liability to tax, the PR could face a hefty penalty for the unpaid tax.
In a recent case HMRC issued a PR with a penalty notice for more than £33,000 because he relied on an old valuation of the deceased’s property.
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Karen Shakespeare
Partner
T: 03700 86 8445
I: +44 (0)1908 48 8445
E: karen.shakespeare@shoosmiths.co.uk