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HMRC internal manual

Trusts, Settlements and Estates Manual

HM Revenue & Customs
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Deceased persons: administration periods: failure to agree the tax liability

The informal procedures are in place because the tax affairs of most estates are not complicated, and most estates only last for a short time. In the great majority of cases it is easier for both the personal representatives and HMRC to resolve the estate’s tax position without setting the estate up within Self Assessment. It is envisaged that agreeing the tax liability will be fairly straightforward with only minor adjustments needed to tax computations.

The exceptions are where agreement is unlikely without entering into protracted correspondence. There might be a dispute over the basis of assessment for example, or a difference of opinion about HMRC’s interpretation of legislation or practice. In these situations the informal procedures are not appropriate and a formal SA return will be required. If returns for more than one year are required, the relevant returns will be issued. A formal enquiry into the return(s) will then be opened to raise queries on and ask for explanations for the entries in the return(s).

Any case where you consider that agreement to the tax liability cannot be resolved locally, and relatively quickly, should be referred to HMRC Trusts & Estates Edinburgh setting out the arguments of both sides and the steps taken to resolve the issues.