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Don't forget PET Disclosure

22nd February 2016

A reminder to all personal representatives on potentially exempt transfers (PETS) featured recently in HMRCs newsletter.

Under schedule 24, Part 1 of the Finance Act 2007, personal representatives of an estate are responsible for providing an accurate account of the estates assets and, therefore, a return to HMRC.

This includes the account of any gifts the deceased made in the seven years leading up to his/her death. Failure to report these gifts or make sufficient enquiries to identify them may result in a penalty imposed by HMRC.

It is important to note however that paragraph 1A of schedule 24 of the Finance Act 2007 confirms that the recipient of the gift is also obliged to disclose the gift.

HMRC considers its concealment to be deliberate and in this instance will impose a penalty of 50 percent of the tax undeclared. This penalty will be paid by the recipient of the gift and not the personal representatives of the estate as per the recent case of CRC v Hutchings UKFTT9 (TC).

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