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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Innocent error: misinformed by a third party

The taxpayer has a personal duty to deliver a correct account.

Understandably some taxpayers will find that they need professional advice and it would benegligent for them to deliver an account without resolving a point on which they were inreal doubt. The extent to which they are entitled to rely on advice will vary according tocircumstances.

For example, the taxpayer might know of the existence of a bank account, but not theamount in it. Enquiries are sent to the bank concerned but the agent advises the taxpayerthat there is no need to wait for the information - the account can be sent in with noreference to the bank account, with the details being sent in later. The taxpayer cannotrely on this advice, because she or he has declared that the account is complete, whenclearly they knew it was not.

On the other hand a solicitor might give advice on the legal consequences of various deedsand documentation such that property the executors thought belonged to the deceased wasactually owned by another person. As a result that property was not included in theaccount. Subsequently it comes to light that the property was rightly owned by thedeceased. The taxpayers were entitled to rely on the solicitor’s professional adviceand were not negligent on omitting the property originally.

Very broadly if a professional agent gives specialist legal or technical advice which youwould not expect to be within the knowledge of a lay person then to accept and act uponthat advice, even if it is wrong or negligently given, would be considered an innocenterror on the part of the taxpayer. If however a professional agent gives advice which anyreasonable and prudent person ought to realise is incorrect, then we consider it isnegligent to act upon and rely on that advice.