Excessive delays within the probate registry is leading to many families being forced to pay unreasonable rates of interest on the deceased’s inheritance tax (IHT) obligations.
Currently, following the death of donor, families and executors of a deceased person have six months to apply for probate, receive the grant of probate, assess the estate’s liabilities and assets, and pay inheritance tax. If an estate fails to pay IHT six months beyond the deceased’s death, they are lumbered with a late payment penalty of 3.25% per year.
In the current climate when HM Courts and Tribunals Service has been wading in a quagmire of ever increasing delays, the usual two to three week period is taking up to twelve weeks, half the time offered by the Government before a fine is imposed.
Although the Ministry of Courts Tribunals and Probate Service (HMCTS) has insisted the backlogs are delaying applications and taking an average of four to six weeks, many legal service practitioners have said delays are actually consistently taking up to twelve weeks.
The Solicitors for the Elderly estimated that the average family take around three months after the death of a loved one before they are in a position, following grief, to calculate the value of the estate, get the affairs in order and apply for probate.
In order for families to avoid a fine, they are expected to anticipate the failings of HMCTS, calculate the estate’s value and apply for probate within days of their loved one passing away. This puts a lot of pressure on a family who would already be organising funeral arrangements.
Many have called for the deadline to increase so that government enforced delays do not unfairly penalise grieving families. Currently, capital gains tax (CGT) and income tax contributions from a deceased person have a ten-month deadline after the next tax year starts. It seems unreasonable that IHT, given the current situation, is not following a similar deadline.
Michael Culver, Chairman of Solicitors for the Elderly, commented:
“With the current delays lasting anything from eight to twelve 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.”
HMCTS officials commented:
“probate applications are only processed when the relevant IHT form has been completed, so even with current delays of four to six week on average, those who pay in good time should be able to pay IHT well within the six-month window.”
A HMRC spokesperson said:
“Interest is charged on late payments to repay the Exchequer for the loss of tax. When a customer knows their IHT reference they may make a payment on account to avoid interest.
Have your clients been charged for late IHT payments? Should the deadline be extended beyond six-months?
