The First-tier Tax Tribunal (“FTT“) has provided a valuable reminder in the case of Harris v HMRC [2018] UKFTT 204 that, with limited exceptions, personal representatives are liable for inheritance tax arising on the deceased’s estate (Section 200 Inheritance Tax Act 1984).Glyne Harris, personal representative of the late Helena McDonald, released a substantial amount of the estate’s funds to Whitfield Harewood, the brother of the deceased and a beneficiary of the estate. The funds were released on the understanding that the brother would discharge the estate’s bills and taxes.

Unfortunately for Mr Harris, Mr Harewood travelled to Barbados (where he lives) and has not discharged the outstanding inheritance tax of c. £340k. Mr Harris has not been able to contact him since.

The FTT struck out Mr Harris’s appeal against HMRC’s statutory review decision, brought on the basis that he no longer possesses sufficient estate funds to discharge the liability. The FTT held that Mr Harris’s appeal had no reasonable prospect of success.

Personal representatives should be reminded to ensure that funds are made available from the estate to meet inheritance tax liabilities (and any other liabilities) arising, before making distributions to beneficiaries.