Mum's probate - we're filing late so they are asking for LOTS of interest - any advice or know of anyone who has managed to negotiate it down?

[loveyouradvice]

Just that really .... one of the two executors was very ill (has all medical evidence) and was unable to engage until 2 months ago. Has now been filed.

Interest of course at 2% above base rate is huge and comes to more than I earn in a year - I don't earn a lot.

Do you know of anyone who's successfully negotiated it down or have any advice to offer?

Thank you

I don't think that you are likely to be able to "negotiate it down". It is what it is.

As to advice, I would say that, if there is any cash readily available in the estate that isn't needed for immediate expenses, such as funeral costs etc, (banks will often release funds with just a copy of the death certificate) then use that money as a part payment of IHT. This will reduce, at least slightly, the amount outstanding and so reduce the total amount of interest.

The second bit of advice depends entirely on the situation of the beneficiaries and this is where you need expert advice tailored to your own situation (not just from some random person off the internet).

Any beneficiaries of the will may wish to consider paying some of the IHT bill themselves in order to reduce the amount of interest payable. But this will depend on their own situations.

If they have money sat in a current account (not earning any interest) that they can comfortably afford to use to pay towards reducing the IHT bill then that may be a better use of their money (they will get their money returned and ultimately receive more in inheritance as less interest has been paid).

In contrast, if they have money in high paying accounts or ISAs etc then they may be better advised to leave their money there and just accept the interest on the IHT bill.

Sorry, forgot to mention that IHT can be paid over ten years, it doesn't have to be paid all in one go (but you do still have to pay interest).

Also, you can also ask banks to pay any funds held by them directly to HMRC to pay off any IHT:

https://www.gov.uk/paying-inheritance-tax/deceaseds-bank-account

From the deceased's bank, savings or investment accountYou can ask banks, building societies or investment providers to pay some or all of the Inheritance Tax due from the deceased person’s accounts. This is called the ‘Direct Payment Scheme’.

We had to pay interest on an estate dh was dealing with for his great uncle. It was due to serious illness. They would not budge.

We filed late on a family member's estate for complex reasons. We had to pay the interest due on the tax.

Thanks - this is very helpful

The estate sounds fairly valuable, interest of 2% above base rate isn't bonkers and the line has to be drawn somewhere.
It's not unfair, it's unfortunate to be caught out by it, but the executors could have engaged solicitors or even a PA to get probate over the line in time.

I'm not unsympathetic but imagine all the people/firms who have to file either HRMC in the UK, to pay taxes, claim benefits etc etc, HMRC can't do everything on a case by case basis, it just couldn't work that way.
The interest is going to UK inc, of which you are a part of, hopefully it will be used for good!

We were late too due to the U.K. GRO refusing to issue a death certificate for 9 months. HMRC didn’t budge even though this was a Government caused delay and Home Office eventually admitted responsibility and told GRO to issue a U.K. death certificate.

This isn't a penalty, it's interest. In other words it's not a 'punishment' that you might be excused in extenuating circumstances. It's just a way of making it up to HMRC for the fact that they didn't have the payment when they were entitled to it. If they'd had it at the right time they would have been able to use it or earn interest on it, so they are effectively out of pocket (and you are effectively in pocket because you were able to use it for that period). It's purely a financial recompense for that, the circumstances are irrelevant. That's the reasoning behind it.

I had to pay interest on late IHT. They aren't open to extenuating circumstances, as far as I can tell. I think you just have to suck it up, unfortunately.

My parents died a year apart; after DF died I was so busy dealing with the care and multiple health crises of DM that I didn't get far with probate, then was diagnosed with cancer myself shortly after she died.

I submitted all the documents for DF about 2.5 years after the death, and had the £200 late-submission penalty waived due to extenuating circumstances, and there was no IHT payable due to spouse exemption, but when I submitted the second lot, just under two years after DM's death, I had to pay the £200 fine plus interest on IHT.

I had managed to pay all the IHT in stages before filing (direct payments scheme from various accounts of DM's, then from DF's assets after I got probate for him) but after the six-month deadline, so the interest was less than if I had paid it all very late.

I think that's a good way of looking at it. The increase on the home value, the interest on savings etc. will all be part of the estate. The base rate reflects that.

thanks all...

Yes @SoloSofa24 this is what I asked my bro (fellow executor) to look into as I assumed this was possible... I was too ill to even read a piece of paper but did have the nous to suggest this, as I'd done similar with my own Income Tax in the past... so yes, darn annoyed despite my asking 3 times that he didnt do this....

Thank you all for wise words - yes, my mum did no effective tax planning at all, so huge amount going to Inland Revenue and I know she would feel happy that it was paying for good stuff (we hope!!).