In the case of Hutchings, the recipient of a gift failed to disclose details to Personal Representatives of the donor’s estate so was liable to a significant penalty. HMRC have now confirmed this is the approach they will take in similar circumstances.
HMRC have made this clear in their December HMRC Trusts & Estate Newsletter which says that there is an obligation on the recipient of a gift to report it to Personal Representatives and a failure to do so will be considered primarily as deliberate behaviour by them. The minimum penalty in these circumstances is 50% of the tax undeclared and could be up to 100% of the undeclared tax. It is important to note that the penalty in these cases is payable by the recipient of the gift and not the Personal Representatives.
HMRC therefore suggest that Personal Representatives may want to consider warning those who might have received gifts of the potential consequences of failing to disclose details of these gifts. They suggest that Personal Representatives may wish to refer to the Hutchings case when doing so.
This announcement by HMRC in their Newsletter reiterates the importance of Personal Representatives making sure they make sufficient enquiries with family members, friends, associates, those named in the Will and the deceased’s solicitors, accountants or financial advisers regarding knowledge of any gifts made in the relevant period. When doing so they should make clear the likely penalty implications if full disclosure is not made when these enquiries are raised.
For further information, please contact Alice Clewes, Partner at Hay & Kilner
Call: 0191 232 8345