Hot on the heels of the Hutchings case earlier this year where a beneficiary was fined for not disclosing lifetime gifts to HMRC, a further warning to beneficiaries of estates is the case concerning, Theresa Bunn.
Ms Bunn was found guilty of lying about the value of assets she inherited from her deceased aunt to avoid paying inheritance tax (“IHT”) on her estate. She was found guilty of cheating the Public Revenue and sentenced to two years and eight months in prison.
Theresa Bunn was found to have given fraudulent details to HMRC following her aunt’s death having informed them that her aunt’s estate was worth £285,000 when in actual fact her estate was worth more than £1.5 million. She had therefore avoided an IHT bill of around £500,000.
According to HMRC, Ms Bunn failed to give correct details of substantial financial gifts made to her by her aunt whilst she was alive, as well as lying about the true value of the estate that she had inherited. Suspicion was generated when HMRC officers discovered Ms Bunn had financially supported a friend, and used her friend’s bank account to hide money as well as there being evidence that she was spending from her family. This suspicion prompted an investigation, which led to the discovery of her aunt’s estate’s actual worth.
There seems to be an ever-growing trend of naming and shaming tax payers by HMRC and they have said that the details of this case have been issued to serve as a deterrent to those contemplating any tax fraud.
Both the IHT threshold of £325,000 above which IHT is paid, and the IHT rate of 40% have been criticised and it will be interesting to see whether there are any changes to this following the election. There are however still ways to minimise IHT implications on death if careful planning is carried out to maximise the use of the available exemptions.
For further information, please contact Alice Clewes, partner at Hay & Kilner
Call: 0191 232 8345