In a move to discourage others from attempting to avoid the payment of inheritance tax, HMRC has revealed the identity of a woman who gave false information about assets inherited following the death of a relative.
Theresa Bunn, aged 56, reported to HMRC that she had inherited assets to the value of £285,000, when in fact the amount was £1.5 million. She has been given a jail sentence of two years, in addition to being named by the tax office to prevent others being tempted to cheat the tax man when it comes to the payment of death duties. As well as lying about the value of assets, Bunn also failed to declare the receipt of substantial financial gifts that were given to her by her aunt prior to her death.
The case came to the attention of HMRC officers when Bunn was found to be supporting a friend financially and hiding cash in her friend’s account. An investigation was launched and Bunn admitted her offences. Stuart Taylor, a director of HMRC, said:
“The vast majority of us pay what is due, when it is due, but HMRC will not tolerate tax fraud and will investigate those we suspect of operating outside the law.”
A number of accountants commented that the naming of the individual by HMRC is a sign that the organisation is cracking down on those who deliberately try to conceal the true value of an inheritance to avoid payment of duty. However, it is believed that a solicitor would normally be the executor when such large amounts are involved. It is possible to reduce inheritance tax in a legitimate manner, although this would normally be dealt with by a professional.
When do you pay inheritance tax?
Inheritance tax is paid when the value of a person’s estate exceeds the threshold, which is currently £325,000. Duty on all amounts above the threshold is paid at the rate of 40 per cent. Leaving 10 per cent or more of the estate to charity will reduce the rate of tax payable to 36 per cent.
Who pays the inheritance tax?
The resulting tax bill is generally paid out of the estate, by the executor if there is a will. If no will has been left, an administrator will deal with the estate. Tax may also be payable on gifts made by the person before they died.
Inheritance tax is a complex subject. If you want to know more about reducing liability in this area in a legitimate manner, contact us at the Accountancy Partnership.