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Filling in IHT403 Form

Practical Issues
Raheen
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Filling in IHT403 Form

#215003

Postby Raheen » April 14th, 2019, 4:34 pm

I am working on completing form IHT403 for the estate of a relative.
The deceased person had a very good pension, modest outgoings & a pattern of a large number of donations
to charities. The charity donations would mostly be made by monthly direct debits from a bank current account.

All of the above suggests that it should be possible to demonstrate that these gifts were exempt of tax under the
"normal expenditure rules". I have filled in the table on page 8 (item 20), using data from bank statements and it looks OK, in
that the annual surplus of income over expenditure easily exceeds the donations in every year.

However, earlier on the form on pages 3&4 (item 7), it says that I must list these donations. Given that they were made in monthly DDs, these payments run to just over 500 discrete items over the relevant 7 years, an average of over 70 per year!

How do I list them?
Would HMRC accept a supplementary listing by year in the form of 7 sets of sheets, submitted with the IHT403?

Lootman
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Re: Filling in IHT403 Form

#215004

Postby Lootman » April 14th, 2019, 4:36 pm

Surely gifts to charity are exempt from IHT by virtue of them being gifts to charity. So why mention them at all?

The "regular gifts from normal income" exemption is for gifts made to individuals.

helfordpirate
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Re: Filling in IHT403 Form

#215005

Postby helfordpirate » April 14th, 2019, 4:43 pm

Gifts to charity on death or lifetime transfers are exempt transfers - they are not PETs. So there is no need to account for them.
See https://www.gov.uk/hmrc-internal-manual ... /ihtm11101

Raheen
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Re: Filling in IHT403 Form

#215006

Postby Raheen » April 14th, 2019, 4:52 pm

The preamble to the box at item 7 page 3 says "Charities" and one of the columns requests the charity's HMRC Reference Number.

I agree that they are exempt but why did they request this listing?

PinkDalek
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Re: Filling in IHT403 Form

#215008

Postby PinkDalek » April 14th, 2019, 5:09 pm

Note the content in helfordpirate's link. Not all charities qualify.

Raheen wrote:The preamble to the box at item 7 page 3 says "Charities" and one of the columns requests the charity's HMRC Reference Number.

I agree that they are exempt but why did they request this listing?


A link to where you are reading is always helpful https://assets.publishing.service.gov.u ... _10_18.pdf

Box 7 on page 3 If you answered ‘Yes’ to any of the questions on page 1 (page 1 is entitled Gifts made within the 7 years before death) is unrelated to Gifts made as part of normal expenditure out of income on page 8. That page 8 has the narrative Only fill in this page if you’ve ticked ‘Yes’ to box 6 on page 1.

PinkDalek
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Re: Filling in IHT403 Form

#215011

Postby PinkDalek » April 14th, 2019, 5:24 pm

I missed this part in your OP:

Raheen wrote:However, earlier on the form on pages 3&4 (item 7), it says that I must list these donations. Given that they were made in monthly DDs, these payments run to just over 500 discrete items over the relevant 7 years, an average of over 70 per year!

How do I list them?
Would HMRC accept a supplementary listing by year in the form of 7 sets of sheets, submitted with the IHT403?


An IHT403 (finalised by solicitors) in front of me states "Please see attached schedule" in a number of places and those separate schedules were accepted (although there were nowhere near 500 items listed). I might consider speaking to HMRC Trusts and Estates to establish what level of detail they require. For example, they might be prepared for you to summarise the donations per charity in total over the 7 years, if that is simpler for you. Maybe even approximately depending on the sums involved.

Lootman
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Re: Filling in IHT403 Form

#215012

Postby Lootman » April 14th, 2019, 5:31 pm

Raheen wrote:The preamble to the box at item 7 page 3 says "Charities" and one of the columns requests the charity's HMRC Reference Number.

I agree that they are exempt but why did they request this listing?

Clearly reporting those items is redundant since they are not taxable items in any event.

My guess would be that HMRC are trying to nudge executors and administrators to double check that the gift recipients are truly registered charities rather than other types of non-profits that do not enjoy a special tax-free status.

Assuming that you are certain that all the recipients in this case are genuine tax-exempt charities than I would quite simply ignore the items. There is probably at least a 99% probability that HMRC will just rubber stamp the forms anyway. And, in the rare event that they do investigate, then you have all the detailed information that will satisfy them that no tax is due.

scrumpyjack
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Re: Filling in IHT403 Form

#215014

Postby scrumpyjack » April 14th, 2019, 5:36 pm

Presumably you can ignore any where the amount for a specific charity was under £250 per annum.

DrBunsenHoneydew
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Re: Filling in IHT403 Form

#215185

Postby DrBunsenHoneydew » April 15th, 2019, 2:23 pm

A one-line entry for each charity is quite sufficient.
Just put in the boxes
2012-2018 Lady Snootingham's Hospice for Genteel Folk, Charity Reg No 123456 Monthly cash donations total £1234 in last 7 years. Charity donation; £0 net value

yorkshirelad1
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Re: Filling in IHT403 Form

#215365

Postby yorkshirelad1 » April 16th, 2019, 11:18 am

Raheen wrote:I am working on completing form IHT403 for the estate of a relative.

How do I list them?
Would HMRC accept a supplementary listing by year in the form of 7 sets of sheets, submitted with the IHT403?


I've seen situations on HMRC forms where the solicitor has put: "please see separate sheet appended" where there are lots of figures for one small box and the solr has just appended my printed spreadsheet of the relevant figures (it was on a Lichtenstein Disclosure Facility form for my sister where I'd compiled all the figures for a particular section in a spreadsheet, and the solr and I agreed that it wasn't worth transcribing them all onto the form).

I also get the sense that as long as the regular income/expenditure figures look "about right" they're not going to challenge them too much, although I have heard some horror stories where they've required n years of historic bank statements to back up the figures. Also, I understand that there is a view within HMRC e.g. on a tax enquiry, for every HRMC employee hour worked on the enquiry, they should expect it to raise £n in tax revenue from the taxpayer.

IANAL and those are just my experiences (wholly not empirical) gleaned over time.


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