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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Deceased persons: the need to review papers

Note

The guidance relating to processes on this page of the TSEM is suspended for the time being as it is under review. This is due to recent changes made to the form R27 and other process changes introduced by the bereavement project. If you have been given other local instructions on the process to follow please refer to these.

Income or gains may arise during the period of administration (TSEM7360). The personal representatives may be liable to pay substantial amounts of income tax and/ or capital gains tax, though generally speaking this will only be the case where the deceased individual had either a substantial amount of untaxed income and/or very valuable capital assets. It is important to review the papers for a deceased person. You can then decide what further action you need to take.

Non SA taxpayers

It will be difficult to determine whether there were sources of untaxed income, or substantial investment income, prior to death that are likely to continue after the date of death. If you do not have SA returns, the strong likelihood is there was not.

We will not normally need to consider the possibility of any administration period liability as this will be unlikely in the majority of these cases. And if the only income arising to the personal representatives is bank or building society interest, their tax liabilities will be covered by the tax deducted at source. But if there is a possibility of tax liability arising, this should be evident from other papers or notes on the taxpayer’s record.

If a liability does arise you should deal with it in accordance with TSEM7406, but you will not need to make any enquiries about any potential administration period liability when reviewing pre-death matters.

SA taxpayers

If the deceased completed SA returns you will need to review the case to determine whether or not the return and/or supplementary pages indicated substantial sources of untaxed income (e.g. Land and Property, Trade etc).

If the deceased had investment income in excess of £10,000 per annum it is possible that the personal representatives might sell valuable assets, leading to a potential capital gains tax liability.

If so, you will need to issue form 920 (TSEM7364). However if you have received a completed form R27 you will already have the necessary information to determine whether a tax liability is likely to arise for the period of administration.