Tax deceased parent

femur61

My mother passed away a few years ago and left a considerable sum of money that she made from selling land. Now it has emerged she didn't pay tax on this money. I am told I will have to pay it. Fair enough, that is understandable but apparently there will be penalties. Does anyone know how these are calculated and why do I have to pay penalties for someone elses mistake. The tax I understand and am willing to pay but why the penalties, it wasn't my fault.

Eglinton

femur61 wrote: »

My mother passed away a few years ago and left a considerable sum of money that she made from selling land. Now it has emerged she didn't pay tax on this money. I am told I will have to pay it. Fair enough, that is understandable but apparently there will be penalties. Does anyone know how these are calculated and why do I have to pay penalties for someone elses mistake. The tax I understand and am willing to pay but why the penalties, it wasn't my fault.

Sorry to hear about your mother. I'm not sure how the penalties are calculated and it probably depends on the circumstances and asset in question.

The tax itself and associated penalties are chargeable on the sale of the asset to whomever benefits from that asset. Which as the tax has not been paid yet, is now you. One of the main reasons the penalties still survive your mother is to avoid situations where people can deliberately avoid paying tax. If they were safe in the knowledge that it would be wiped on their passing the asset to the next generation no one would bother paying their tax.

You may be able to come to an arrangement sith Revenue as to the amount of penalties to be paid.

Alan Shore

Capital Gains Tax is due. The liabilities are those of her estate.

The tax due should be calculated, there will be a 10% surcharge for not filing the return. The interest is 8% per annum.

I don't think that they can charge a penalty because a penalty is a substitute for prosecution and they can't prosecute a person who is deceased.

Mr. Incognito

Why would you not have to pay it?

If you defraud Revenue they will take what they are owed and then some.

Its a tax on the estate, dead or alive.

You will have to pay the tax, interest and penalties.

Penalties can be negotiated. Interest cannot.

Hire a good tax advisor or tax lawyer. Accountants unless they specialise will not have experience of negotiations with Revenue.

femur61

Mr. Incognito wrote: »

Why would you not have to pay it?

If you defraud Revenue they will take what they are owed and then some.

Its a tax on the estate, dead or alive.

You will have to pay the tax, interest and penalties.

Penalties can be negotiated. Interest cannot.

Hire a good tax advisor or tax lawyer. Accountants unless they specialise will not have experience of negotiations with Revenue.

I didn't defraud anyone. I didn't know about the outstanding issues till the last couple of weeks. We are trying to finalize the last bit of probate and when a tax clearance certificate was applied for then the issue came to light. My mother passed away nearly three years ago. I am in a panic as I will comply to pay taxes but penalties will leave me short.

P. Breathnach

femur61 wrote: »

... I am in a panic as I will comply to pay taxes but penalties will leave me short.

The very worst that can happen is that the estate will be reduced to nothing. The Revenue will not come after you personally for any shortfall. And the costs of the funeral and the cost of executing her will will also be allowed to you.

The Revenue have some discretion in how cases are handled - subject to their general responsibility to collect as much as possible of taxes properly due. If it seems to them that no fraud was intended, they might not push the penalties issue.

Peregrinus

What Alan Shore and P. Breathnach said. You don't have to pay her tax bill, or her penalties. These are liabilities of her estate. These (and other) liabilities will reduce the balance of her estate that will (presumably) come to you, and they could conceivably reduce it to nil. But you yourself have no liability.

The position is complicated if the administrator of the estate failed to recognize your mother's tax/penalty liabilities, and has already distributed cash or assets from the estate to you. In this case you may have to return some or all of what you got from the estate, in order to rectify the error. You may possibly had a claim against the administrator if he was negligent in failing to spot the tax/penalty liabilities, but that's quite a complex question and if you want to explore it you do not want to be relying on what you read on internet forums like this. Go and see a lawyer.