To think there is something immoral about this - Late Self Assement tax penalties in deceased Aunts estate?

[justgivemeamo]

So, I know nothing about self assessment tax and I am my Aunts executor. She passed away a month ago and we have had a £1,500 bill through totally made up it seems of late or no - self assement tax arrears.

Now she rented out a property but had massive issues with tennants for years and from at least last May had no rent at all from it.

If rent was coming in it would be about 700 a month. She had two meagre pensions, private 180 a month and state, and a few shares that could not have brought in more than a few hundred pounds dividends.

She was also pretty immobile and house bound for the last two years of her life with several reasons why she was immobile and was in and out of hosptial for long 2 - 6 week stays at a time.
The letter also said " interest is being added please pay now"

I mean I dont expect of all places the Tax office to morally proper but it seems really off to me, to be charging an elderly lady with a paltry income for late self assessment forms....she obv had no access to the internet and relied on her friend to all her running round for her! I have spoken to the tax office and they are going to look into it but I fear they are a tough department.

Really secret that gives me much hope. Glad you got it sorted.

I have helped a friend with this, and got the penalties waived.
Basically it is automatic. If they send you a tax return because at some point you had income that wasn't taxed under PAYE then each year you either have to submit a tax return on time, or convince them that your circumstances have changed and no return is due. Otherwise a fine is incurred which then escalates the longer you leave it and attracts interest regardless of whether any tax is due. Because if they didn't do that thousands of people would be 'too busy' to fill in tax returns.
What you need to do is.....
Find out which tax years your aunt didn't submit a return for.
Work out as far as you can what her income, where it was coming from, whether her pensions already had tax deducted and any expenses such as costs of maintaining the properties in each tax year. You will then know whether she should have paid any tax.
Fill in the returns. You will need to find out whether they will accept paper returns, or whether it has to be online. Once you have worked out all the figures it should be relatively easy.

Submit the returns with a letter explaining why she was unable to manage her affairs in the relevant years, and pay any tax due.
You probably also need to look at the inheritance tax/ capital gains tax situation on the properties.

I realise this is the last thing you need, but I'm afraid it is part of being executor. You could gather together all the paperwork for each tax year, work out the figures and then take it to an accountant to check and submit. That way there will be no come back once the estate is all distributed.

Don't be scared of the tax office, they are a bureaucratic lot, and it is now much harder to talk to someone face to face, but the people working there generally want to help people who want to pay the right amount of tax, imhe.

Once you have worked out all the figures it should be relatively easy

Its this that will be the killer part

Properties and whole estate have come in well under IHT threshold.

You could gather together all the paperwork for each tax year, work out the figures and then take it to an accountant to check and submit. That way there will be no come back once the estate is all distributed Very good idea better way round of doing it to save costs

but the people working there generally want to help people who want to pay the right amount of tax, imhe.

Yes, that's reassuring to hear. I had a quick google and heard about all sorts of nightmare scenarios where it had been settled then something else cropped up.

Hmrc are generally really nice, nothing to fear. Have you got any proof or documentation to show when the last tenant moved out? Sounds like in May she should have notified them that she no longer needed to complete SA as it was not generating income. I'm sure if you send a letter with a copy of the documents attached inc death certificate they will write to you with a revised figure or cancel the balance altogether. Also check the tax thresholds as if she was earning less than £3k a year in that final tax year (I think it is 3k, check the website), she would not need to declare it anyway. It is probably a case that they didn't know so assumed she was still earning the same as previous years.

I cant tell you how much better I feel, even if there is a chance to get some of the fines reduced it will be wonderful.

The tenant was sort of evicted last year probably in May I think, it was all rented out through her, not through an agency. Ie no proper paper work trail. The tennant was out in May however they had not paid proper rent for months before that.

Dont worry about doing any of her returns yourself until you have done the above, they will tell you what you need to complete if anything. No need for accountants at this stage. Mumsnet advice is alot cheaper

Ok its frustrating not to have a paper trail but put in your letter the approx dates the tenant left, the circumstances and that she was in pain and not on top of her affairs. Someone will ring you back or write back and you can take it one step at a time. They will just want to arrive at a final figure and close the account so it should be simple. The penalties will be removed from when she died if not before, so don't worry about eacalating charges.

*escalating

thanks Silky. I do feel most reassured now by everyone {breathes a few sighs of relief}

Everything else has been straight forward so far with the Probate and estate...too smooth until yesterdays bomb shell. But hopefully we can work through that.

Just to add a few more things - as mentioned getting the info together is the harder bit but an accountant won't help with that. You really can do it all yourself.

A tax return is really quite simple and there is lots of guidance and help sheets on line even if the return is done on paper. If by any chance an online account can be setup, it is even easier.

All costs for eviction are tax deductable , and obviously with no rent for a year there will be no profit to tax.

The tax people should be easy to contact now, it is only in the month before deadlines that it gets impossible. I do my return in July and the response is very rapid.

As others have said, HMRC have done nothing wrong here. Your aunt was at fault. The advice to get on and file the returns was good. I'd also agree that HMRC are pretty reasonable and pleasant when you show a keenness to put things right (as you've done, to your credit). I'm sorry for your loss and I hope that this process won't be too gruelling.

The phone lines are open 8-8 Mon to Fri, 8-4 Sat and 8-5 Sun if you need to call HMRC for help or advice OP

The info I got wasnt clear just a series of charges, I am wondering if its just accumulated fines? It says late penalty - so I am assuming she actually get some returns in?! I am praying this is the case anyway.

"Late" could mean that it wasn't submitted. Sorry OP. Give them a call first thing to clarify.

Once the returns are filed and show sod all liability then you write to HMRC appealing all of the penalties on the basis of proportionality.
Do not phone, just write - recorded delivery.

It will be fine.

Call HMRC tomorrow and ask to speak to the Extra Support team. I promise they'll help, they'll stay in touch with you until it's resolved

Special support team sounds promising Honestly Aunt bless her was a wonderfully creative woman, so interesting and intelligent but couldn't cope at all with any admin side of life. Well not later on anyway.

Her affairs need all special support I can get

The thing is this goes back years, about 8 years