AP4362 - Deceased Persons: Tax arrears when estate distributed

In England and Wales, the personal representatives can give notice under Section 27 Trustee Act 1925 that the estate is to be distributed on a given date. This is to protect them against any claims in respect of unknown debts after the estate has been wound up.

The notice has to be published in the London Gazette, and if the estate includes land, in a newspaper circulated in the locality of the land as well.

The Personal Representatives are responsible for ensuring that the tax due up to the date of death is correctly adjusted, so it is most unlikely that there will be any tax liabilities falling within the definition of "unknown debts".

If any such liabilities do come to light ,and if the Revenue fails to make a claim against the estate in respect of the unknown tax debts before the given date,(not less than 2 months from the date of the Section 27 notice), the personal representatives no longer have to meet those tax liabilities.

We can however still pursue the individual beneficiaries for the tax due.

The Section 27 notice does not relate to tax liabilities on any income arising after the date of death. This remains the responsibility of the personal representatives.

Where an unknown tax liability in excess of £1,000 first becomes known after the Section 27 distribution date has passed, but is still within the normal assessing time limits, contact DMB Process Shipley by either e-mail or telephone (01274 539444) for further advice.