Grieving families have endured punitive rates of interest on their Inheritance tax (IHT) bills through no fault of their own.
Due to massive delays in courts, families have been required to pay extra death duties because of late IHT payments.
Because of overdue IHT, it has meant people are having to pay interest rates in excess of 3%, which equates to more than four times the official bank rate.
For example, an estate with a £600 tax liability might have to pay more than £100 every day if IHT continues to be left unpaid beyond the stipulated deadline.
HMRC rules specify that IHT bills must be paid before a testator’s assets can be given to the beneficiaries and the full amount must be paid six months after the date of death. Probate service delays, caused by system glitches and a backlog of cases, has greatly affected bereaved families with disastrous consequences.
The prolonged interruptions have made it impossible for many to pay the debt within the 6-month time limit HMRC have enforced – meaning late payments generate interest penalties on families.
Due to delays, many cases are going beyond the 6 months without the grant of probate – which is required to distribute someone’s estate.
On average obtaining a grant of probate would have normally taken 2-3 weeks. However, over the last few months, both the Institute of Legacy Management and The Law Society have confronted the HMCTS about the prolonged delays to the probate service which were taking up to 3 months to progress.
Michael Culver, the chairman of Solicitors for the Elderly commented on the delays and the impact on the families. He said:
“With the current delays lasting anything from eight to 12 weeks, all of the six-month time frame is quickly swallowed up. This means more and more estates will be paying interest on IHT that they might otherwise have managed to avoid.”
Culver described the situation as “unfair and not realistic” to let families bear the burden of having to settle huge tax bills in such a short time frame.
Culver further adds:
“There has been no suggestion from HMRC to date that it will extend the period to allow for the probate registry delays.”
The Ministry of Justice has since claimed the process is now taking four to six weeks on average and last month Ian Bond, Chair of The Law Society’s ‘Wills and Equity Committee’ confirmed HMCTS hope to sort out the backlog by the end of the summer regarding probate applications.
3 Responses
ministry of defence ??? last paragraph should it not be justice
It is not only HMCTS who are causing delays, but also HMRC in the processing of IHT forms and issuing the IHT421 so the Grant can be issued. I currently have three clients making personal applications for Probate who submitted the IHT forms and paid the tax towards the end of April, but the IHT421 has still not been sent to the Probate Registry. Until they get the Grant, the clients cannot access the deceased’s money to pay the instalment option tax which is now due and consequently will end up paying interest to HMRC because of delays caused by HMRC!
still waiting for a probate submitted 8th May – can see the problems being resolved by ‘end of summer’