A recent case clearly illustrates the inherent dangers of appointing amateur executors to administer your estate rather than qualified professionals.
The executors were dealing with the estate of a deceased man and as part of their duties they filed a tax return which covered the period from 6 April 2012 until his death in October that year.
They had inadvertently failed to include all of his taxable income on the return. They filed the return in August 2013 and a month later sent a cheque for £15,333 ‘in full and final settlement’ to HM Revenue and Customs (HMRC).
Receiving no reply from HMRC, they completed the administration of the estate and distributed the assets.
In 2014, HMRC raised an enquiry into the submitted return which led to a penalty of some £5,000 being raised. Despite protests about the length of time it had taken HMRC to raise their concerns about the tax return submitted, and doubts that the beneficiaries of the estate (especially a number of charities, which had benefited from 35 per cent of the estate) would repay the sums wrongly paid to them, the judge in the First-tier Tribunal was unmoved. He stated, “We bear in mind that, by taking on themselves the administration of an estate, the appellants chose to risk the consequences of whatever shortcomings in their legal or accountancy knowledge there might prove to be. It is not our function, or the Revenue’s obligation, to relieve the appellants of the results of their choice to undertake that work without professional assistance. The fact that ignorance of the procedure to guard against late claims left the executors vulnerable to the assessments made must therefore be disregarded, as must their inexperience in handling accounts – which doubtless led to the error.”
The executors were left to pay the sums due to HMRC themselves and seek reimbursement from the beneficiaries.