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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Pre-enforcement: consider the defaulter: deceased customers: estate distributed / no estate

Payment refused because estate distributed or no estate

If payment is refused because the personal representatives claim that the estate has been distributed or there is no estate and either:

  • the debt is £1,000 or less
  • the estate was distributed more than a year ago

do not pursue the debt but close the record down.

Where either:

  • the debt is more than £1,000
  • the estate was distributed less than a year ago

PT Operations and the Estates and Trusts Office should follow the guidance below.

PT Operations

If an underpayment has been calculated but there is no debt on record, send the details by email to the Estates & Trusts Office at DMB, Estates & Trusts Office (Mailbox) (DMB Debt Mgmt).

Estates and Trusts Office

Obtain:

  • the full name of deceased
  • the date of death
  • details of the estate distribution and the amounts distributed to each beneficiary with their personal details
  • details of any jointly owned property
  • if the debt was due from the deceased during their lifetime, or on income arising after the date of death
  • the date of publication, if a notice was made inviting claims against the estate: in England and Wales under Section 27 Trustee Act 1925: in Northern Ireland under Section 28 Trustee Act (NI) 1958.

You will then be in a position to decide if it would be appropriate to approach the beneficiaries or the co-owner of a formerly jointly owned property for payment.

Formerly jointly owned property

In the case of a property jointly owned on the date of death, the former joint owner, who now owns the property outright by survivorship, can be ordered to pay value to the estate under s421A of the Insolvency Act 1986.

It is open to HMRC, within five years of the date of death, to apply to the court for an insolvency administration order (IAO) to secure the appointment of a trustee who will administer the estate for the benefit of its creditors. The trustee appointed would make an application under s421A(2) to ask the court to make an order requiring the survivor to pay an amount not exceeding the value lost to the estate. Such proceedings would incur legal costs and also the trustee’s costs of administering the estate.

If there is sufficient unencumbered value in a half share of the property, consider writing to the current owner or their agent for payment.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Beneficiaries

You can approach the beneficiaries for payment as the amount they received from the estate will have been increased by the non-payment of tax before distribution. Consider if writing to each of the beneficiaries for payment is appropriate in particular if there are several beneficiaries or if the amounts involved are small.

Any subsequent action should be authorised by your line manager.