Following on from the widely reported Hutchings case last year HMRC has now made a statement in its latest Trusts and Estates newsletter about the duties on personal representatives to make full enquiries with the relevant people about whether the deceased made gifts in their lifetime which will impact on the IHT position on death.

Interestingly, HMRC make it clear that the penalties for failing to comply with these duties will be equally applicable to beneficiaries who fail to disclose gifts.

The penalties can be up to 100% of the tax at stake so dishonest beneficiaries might be faced with a large tax bill (which they might not have anticipated when the gift was made and so have made no provision for) plus a penalty on top...and interest on the unpaid tax for good measure!