Close Companies: Settlement - Deceased Director
Where a capital accumulation comes to light following the death of someone who was, or had previously been, a director of a company your risk assessment should include
- a review of the affairs of the remaining directors, and
- consideration, based on the company accounts and other available information, of possible weaknesses in the records and indications of the source of the accumulated wealth.
If the AP in which the deceased person ceased to be a director is in date, you should open an enquiry on the company under FA98/Sch18/Para 24. Otherwise, in appropriate cases, endeavour to establish the source of, or explanation for, accumulated wealth by speaking to the personal representatives of the deceased taxpayer. Make the initial approach to their agent, if any. Either way you will probably need to be open about the reason for your enquiry and you should approach the issue with sensitivity.
If there is no satisfactory explanation for the accumulated wealth you should proceed on the basis that the unexplained capital accumulation arose from misappropriation of company funds, the tax on which is recoverable from the company EM8600+. The fact that the director has died should be regarded as irrelevant. The assessing time limits at TMA70/S40 do not apply. Where this is resisted and only the deceased director has unexplained accumulated wealth, you should make a report to contact link before taking any further action.