The First Tier Tribunal Inheritance Tax Case of Silber v HMRC looked at how a settlement of cash made between the beneficiaries of the deceased’s estate and the deceased’s sister should be treated for Inheritance Tax.
The sister challenged the will of the deceased and she was paid an out of court settlement of £400,000 by the beneficiaries.
The Beneficiaries claimed the £400,000 as a liability of the estate and thus a reduction in Inheritance Tax payable of £160,000 (£400,000 x 40%).
The Court held that the money paid was not a liability incurred by the deceased and thus wasn’t allowable for IHT relief.
The taxpayers’ case was not helped because of the fact that they did not turn up for the Tribunal hearing (even though they were expected) although there is little doubt that the tribunal reached the right conclusion anyway.
Eaves & Co are experienced in inheritance tax planning and compliance, please call if you have IHT concerns.