An Executor is appointed by the deceased person under a Last Will & Testament. The responsibilities of a Personal Representative (Executor/Administrator) is to take action to protect the assets of the Estate, pay all debts and taxes arising in the Estate. Thereafter for the Personal Representative to distribute to the Beneficiaries in accordance with the wishes of the deceased.

The Personal Representative cannot do anything that intentionally harms the interests of the Beneficiaries in the Estate. A Personal Representative cannot ignore a Will nor can they rearrange a Will for personal gain. A Personal Representative can receive a bequest through the Will or even be named as a beneficiary in the Estate. However, before distribution in the Estate their Role as Personal Representative must be completed fully and satisfactorily on behalf of the estate of the deceased.

If you act as a Personal Representative of an Estate, then it is absolutely essential that the Personal Representative fully understands the role and responsibilities. A Personal Representative can be held personally liable for any mistakes that have or may happen, even genuine errors.

In the case of Glyne Harris, he was ordered to pay £340k Tax Bill because he did not fully understand the process of acting as Personal Representative.

In Glyne T Harris as personal representative of Helena Norma McDonald (deceased) v HMRC [2018] TC06448 a personal representative was held liable for the estate IHT; assets were transferred to a beneficiary who had returned overseas without settling the tax as promised.

The Inheritance Tax Act 1984 provides that:

  • Inheritance tax (IHT) is charged on the death of an individual as if, immediately before death, they had made a Transfer of value equal to the value of their estate.
  • The deceased’s personal representatives (with limited exceptions) are liable for the inheritance tax arising on the deemed transfer on death.

Mr Harris was the appointed personal representative of the late Helena Norma McDonald:

  • He filed the IHT400 return, HMRC opened an enquiry and issued a determination for £341,279 of IHT.
  • The determination was upheld on statutory review and Mr Harris appealed on the grounds of insufficient funds.
    • He had released a substantial amount (possibly all) of the estate’s assets to the brother of the deceased (and a beneficiary) on the condition he settled the IHT.
    • The brother returned home to Barbados without settling the tax and Mr Harris was not able to contact him.
    • He did not appeal the amount of tax determined by HMRC.

The First Tier Tribunal struck out the appeal as having no reasonable chance of success:

  • The fact that Mr Harris had transferred the assets of the estate to a beneficiary on the basis that they would be responsible for payment of IHT and was ignorant of his obligations as a personal representative to pay the IHT was no defence.

If Fisher Jones Greenwood can assist you in the Administration of an Estate or provide you with advice in planning for your future please contact us on 01206 700113 or email [email protected] to arrange an appointment.