Tax due on child's legacy ?

[notonmywatch28]

Hello, any advice welcome on this problem my 19 year old daughter has. She was left a child legacy by relative , and the will stated that the solicitors were to be appointed as trustees.
When she turned 18 last year, we had to chase them for the money ( they did not contact us). A cheque for the amount due was duly sent, but a percentage (£2500) was retained by the solicitors as they state that this was "the gain that was chargeable as income and not capital and was taxed by HMRC. They then go on to say that HMRC say that it is under review.
My daughter is in full time education ( now at uni ), and has no income, so surely she wouldn't have any tax to pay ? Both she and I have phoned and written numerous times since November 2016, all they tell us is HMRC could still demand the money at anytime in the future. Is this right?

Over time presumably interest would be paid on the legacy and HMRC would want their cut.

I would suggest either phoning HMRC or have your daughter fill in an online tax return.

Thanks for the reply. I have spoken to HMRC, but they can only discuss it with Dd. She is back from uni next week, so will get her to phone them . We have asked the solicitor to send the money, then she can fill in a tax return form, but if she hasn't received it, I'm not sure that's the right thing to do. All the info I can find online says that tax on interest on investments is not payable if you are a non tax payer.
My concern is that the solicitors are hoping we will forget about this money .....

It depends how much the gain is. My children were given money in this way and because there was a gain of more than the annual tax free allowance they have both had to fill in tax returns. My only had summer holiday earnings and my daughter had a bit more as she started work during the tax year (she's an actress so self employed) she had expenses that she could reduce the tax bill by.
Unless the gain has been huge (say £20k) then the tax should be nowhere near that.

I would tell the lawyers that it is your child's responsibility to fill in a tax return and pay whatever tax is due and they should release all the money to her. They can't possibly know her financial circumstances. She will need to register with the inland revenue for self assessment before the end of October after the end of the tax year in which she received the money then fill in a tax return.

But it is her money, not theirs and they shouldn't be waiting until the inland revenue come for it as I would think they will charge interest if it is delayed payment.

That's helpful, thank you. The legacy was £12,000, which by her 18th birthday matured to just over £21,000. So the gain is £9000, and they've kept back £2500 of this . Dd did have a Saturday job prior to going to uni, earning under £2000, so she is just under the tax allowance. I have tried to point out that is dd's responsibility to inform HMRC but they say they must retain the money on DV's behalf.
Her cousins , who are 5 years older and now living overseas , also had difficulty with obtaining their money( a couple of years ...). Feels like there are some dubious practices going on ..

That's ridiculous.
If the gain is £9k and your daughter earned £2k she won't have to pay any tax. My daughters gain was more than that and even earning a small amount her tax bill was only £1400 or so.
Even 20% of £9k is nowhere near £2500.
I would phone and ask to speak to the senior partner of the law firm
I would ask what rate of interest they are gong to pay you on the money they are withholding as they have it in their accounts
If you don't get any joy I would phone the law society and ask them. It's your daughter's money and her tax bill. They will come to her for the tax not them
My children's money was dealt with by the financial advisor rather than a solicitor and they were sent a letter from the financial after they had received the money saying they would need to declare it and pay tax.
Sorry getting ranty here but ask the solicitors how they and the inland revenue will be able to work out how much tax is owed if your daughter doesn't fill in a tax return and why would they come to them for the money if your daughter has filled one in.
Gosh I'm getting cross on your behalf.

The trust is taxed in its own right. See this: www.gov.uk/trusts-taxes/parental-trusts-for-children - not sure how it relates to a trust set up in a will, but the principle that the tax must be paid by the trustees still applies.

I see that actually. It is in a trust fund so there will be tax and fees to pay on that. I should learn to read the post more clearly. Still think the lawyer should explain it better

Thank you all for your advice and the link to the gov site. I emailed the partners last night, and received a response back today ( I should of gone above the person I was dealing with a while ago...). They say did have to pay HMRC, but received a refund 3 weeks ago, now they need HMRC to confirm the case is closed, then they can send the money .
Either they have been pro active regarding this and their communication to us is rubbish, or they were hoping we'd forget about it ...!