Meet the Other Phone. Only the apps you allow.

Meet the Other Phone.
Only the apps you allow.

Buy now

Please or to access all these features

AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

does HMRC routinely check bank accounts on deceased people?

30 replies

butterflyballs · 07/06/2018 19:15

Do the HMRC check bank accounts of a person who has died if the account had been run by a member of the family (who was the sole beneficiary of the estate) for that person?

Say Bob has a disability and can't deal with finances. Bob hands over everything to his daughter to run for him. She pays for carers, bills etc from his account and also pays for any medical supplies from it. She also does care for him and he in return pays her water bill as payment.

When he dies she is the sole beneficiary of the estate which includes several properties and some cash.

Would HMRC then go through the account of Bob and demand receipts for every payment since the daughter took over the finances?

Is this normal?

OP posts:
Wearelocal · 07/06/2018 21:57

Oh what happened to this thread?

Wearelocal · 07/06/2018 21:58

Sorry! The thread disappeared on my screen for a moment!

Jonbb · 07/06/2018 22:02

I was a benefits advisor and yes, if he was claiming benefits it is usual for the DWP and HMRC to routinely check savings to ensure they were claiming correctly. If not, they will claim against the estate. If you are the executor and sole beneficiary you need to ensure the money is retained until any claim has been met.

Dsc1907 · 07/06/2018 22:29

Whoever this person is needs to appoint a qualified tax adviser. Very little of what you've posted makes much sense.

HMRC can't just look at your bank transactions. Banks report interest and investment income they've paid to you, but not the individual transactions on your bank account. HMRC can review the Land Registry to see if people own properties they haven't been declaring rental income / gains on.

HMRC can open an enquiry into a tax return, or lack thereof, and as part of that then request access to records.

If you have power of attorney you will be required to report back on every transaction made each year and its justification, but that takes places during the person's lifetime.

A gift, whether of cash or by paying bills, is not subject to income tax in the recipient's hands. It would potentially be subject to IHT depending on how many years prior to the donor's death it was made, unless covered by an exemption.

Bob's estate whilst in administration will have been required to file tax returns. Once the estate has been distributed to the beneficiaries then his daughter would be required to file tax returns reporting her income and gains.

As has been pointed out, if the estate was significant there will be IHT payable. If the administration of the estate hasn't been dealt with properly or HMRC has reason to believe there are inaccuracies in the IHT returns or her income tax returns, they could open an enquiry.

Whatever info you've been given is incredibly vague, inconsistent and quite confused to be honest. You also haven't mentioned timelines or whether probate has been granted, etc. So it's really hard to tell what on earth is actually going on.

Whoever this person is needs to appoint a qualified tax adviser to help them. If they have made a mistake it will not go away on its own. HMRC do not just give up and go away. And if they don't understand what they're dealing with there's a strong chance they could get themselves into deeper trouble. Depending on the taxes involved and the issue then there are penalties, some of which are behaviour based, as well as interest charges.

If they are on a low income, there is a charity called Tax Aid which works to help people on low incomes to resolve problems with HMRC, which has a helpline and may be able to assist. Taxaid.org.uk

However, if they have rental income of £6k pm(?) they won't meet the definition of low income (under £20k pa)... But it may still be worth trying the helpline depending on their actual circumstances. Their website is also designed to help people understand the tax system.

Whatever they do, they need professional qualified advice.

Butterflyballs · 08/06/2018 08:57

Sorry it's all vague, this is all the info I have.

The income from the rent is £1k a month, the tenants always pay six months at a time. They just prefer to do it that way.

I don't think Bob claimed any benefits as he had sufficient money in his accounts to pay for his care and needs. His DD had POA as far as I'm aware but certainly had control over his accounts and dealt with everything on his behalf. As far as I can see everything is above board with the rent being declared as income, the property being listed as a rental and the appropriate insurance taken out on it.

It was just that I was talking to her and she said the tenant needs a new back gate but they have zero money, are broke. Because they need to find £40k for HMRC. She said they are trying to find receipts for all the things they have paid for her dad and if they don't they will be fined.

So I really don't understand it either which is why I asked on here. It just seemed a bit odd and as I said previously the tenant had paid her directly in April to ensure that the money was there should they need to do any repairs on the property. Now this money is not available and the tenant has a broken gate (which can fall on passers by) leaving his garden open to anyone.

It is very confusing indeed. Although I am fascinated by all your answers and information. You have all been very informative and told me things I had no idea about (having never inherited a bean). So thank you.

OP posts:
New posts on this thread. Refresh page