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Rachael Morley

Posted 11 April 2016
by Rachael Morley

Executors held personally liable for income tax bill after administering an estate without taking professional advice

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Usher & Perkins v HMRC [2016]

This case demonstrates the difficulties that well-meaning executors can place themselves in when acting in the administration of an estate without the support of a trusted legal advisor. 

An executors’ inexperience will not protect them from the Revenue’s penalty system nor from the many duties placed on all personal representatives.

Although lay executors may initially save costs by not taking professional help, the costs of dealing with a claim by HMRC and having to bear personal liability for debts which cannot be reclaimed from the beneficiaries could be considerably more.


The executors of Mr Guy’s estate accepted their role as executors and administered the estate without taking any professional advice.  As part of their administrative responsibilities, they submitted an income tax return for period up to the date of Mr Guy’s death to HMRC.  Once they had submitted the return, they considered that their responsibilities had been met and distributed the estate to the beneficiaries.

Unfortunately for the executors, HMRC questioned the accuracy of the income tax return.  In the Revenue’s view, the executors had under-declared Mr Guy’s income. HMRC also alleged that the executors’ action was deliberate as the investment income figures on the Inheritance Tax return did not match the figures on the income tax return.


The tax Tribunal found the executors’ error in under-declaring the deceased’s income to have been careless. Their inexperience in handling accounts and ignorance of procedure were both disregarded by the Tribunal in reaching this decision. Consequently, the additional tax liability was held to remain due as did with the interest outstanding on the unpaid tax.

Far worse for the executors was that, because they had already distributed the estate when they became aware of the higher tax bill due to the Revenue, they were held personally liable for the income tax and the interest.  This means that the executors had to settle the liability from their own funds rather than asking the beneficiaries, who had received the estate, to pay it.

The Tribunal held that by acting themselves the executors’:

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.”

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About the author

Rachael Morley

Rachael Morley

Associate and Solicitor

Associate in the wealth management team