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Bad advice from HMRC cost me £10,000 in inheritance tax bill: SALLY SORTS IT

I was executor of the estate of a friend who passed away in May 2021 at the age of 90. Part of my role was selling his house.

Due to telephone advice from HM Revenue and Customs, I ended up having to pay exorbitant interest, which I estimate at around £10,000, on the inheritance tax owed when I should not have paid it.

I have not even received confirmation that the total amount of £145,000 that I handed over to the tax authorities last October has been safely received. I have contacted them several times to resolve this but have not received a satisfactory response. I’m worried and feel like I’m being ignored. SH, Stourbridge, West Midlands

Due to the telephone advice from HM Revenue and Customs, I ended up paying exorbitant interest, says a reader. Is there anything I can do?

Sally Hamilton replies: You wanted to do everything by the book and pay all inheritance tax due within the rules. This tax is levied at 40 percent on an individual’s estate in excess of inheritance tax of £325,000.

The rules state that the tax bill must be paid before the end of the sixth month after death to avoid interest charges.

Real estate transactions can be incredibly slow and if it takes more than six months to find a buyer, the payment deadline can be missed and interest can accrue.

Not knowing how long the sale would take, you decided to pay the tax on your friend’s estate in installments. This arrangement, which is achieved by completing an IHT400 form, allows payments to be spread over ten years, even though interest is paid over the entire period.

The scheme can be useful for someone who has inherited a property, wants to live in it and has no other source of financing to pay the full tax bill immediately, but can pay the instalments.

To your surprise, your friend’s house sold faster than expected: the transaction was completed about four weeks before the six-month grace period expired.

You notified HMRC in November 2021, shortly after the sale was completed, and told them that you wanted to pay the full inheritance tax bill of around £135,000 straight away to avoid interest.

This is where things went wrong, because the woman on the helpline said not to worry and to continue paying the annual installments. You thought this was strange because you had the entire money at your disposal, but you went along with it.

Over the next few years you paid installments but, worryingly, never received a receipt or an explanation of the amount you still owed. You were afraid that you had fallen victim to a scam.

When you called the tax authorities again to express your concerns, you finally got someone who said that you should never have paid in installments because the property had been sold. You asked for an explanation, but all you received was a letter stating the current interest rate of 7.75 percent.

Can Sally Sorts It help you?

Do you have a consumer problem that you need help with? Email Sally Hamilton at sally@dailymail.co.uk – include telephone number, address and a note addressed to the offending organization giving them permission to speak to Sally Hamilton.

Please do not send any original documents as we cannot take responsibility for this.

No legal liability can be accepted by the Ny Breaking or This is Money for any answers given.

Out of desperation you simply decided to pay off the balance of the account on October 25 last year, bringing the total amount paid to around £145,000. Again no confirmation.

In January you were at your wits’ end and contacted me.

I have asked the Tax Authorities to investigate what went wrong and to put things right quickly. A few days later it confirmed that all payments had been received, but added the disturbing note: ‘All applicable interest has been paid on the estate.’ This was concerning as no interest was due. I have asked the tax authorities to take another look.

This time a spokesperson came back to confirm the tax authorities’ error regarding the advice you received, and that your repayment plan should have been canceled before it was even initiated and no interest should have accrued paid.

It took more insistence on my part, but eventually last week you were refunded the overpayment plus interest on it – a total of £10,111 – together with an apology and a goodwill gesture of £150.

In gratitude for my intervention, you have donated £100 to the Marfan Trust, a charity I support.

STRAIGHT TO THE POINT

I paid £45.70 for two train tickets from London Euston to Manchester Piccadilly. My outbound train was scheduled to leave at 10:19am but it was canceled and I was told to catch the next train at 11:19am. The station staff said I could claim a full refund, but I would only get 50 percent of the ticket price back. DI, London

Although the second train departed at 11:19am, it arrived just 45 minutes after your original train would have run into Manchester Piccadilly. Therefore, you are not entitled to a full refund.

I paid for the accommodation in Thailand with HomeAway. It was canceled the day before our arrival – we booked another one but were told if no one gave us check-in details on the day it would be cancelled. So we booked another hotel but I still spent £650 on temporary accommodation before we checked in.

CG, via email

HomeAway says it’s glad you received a refund from both hosts. You will then receive €650 back after you have converted the previously offered €247.

I transferred my deceased wife’s savings to the wrong savings account because I used an old account number. The money was deposited into someone else’s account and they did not respond to the mortgage bank’s request to get the money back. I know this is my fault but please help.

AK Lancashire

The €2,000 you transferred, and a goodwill gesture of €200, have been paid to you.

I found out my credit card was charged for a streaming subscription, but I don’t have one. The platform said an account had been opened in my name with a Russian email address. My bank says they could only block payments for 13 months and the streaming service said they could take no action.

DS, Glasgow

You have refunded the subscription payment and the platform has taken action to stop the activity.