Can I deduct Solicitor Probate fee from CAT

[Astramund]

Sadly, 3 of our siblings passed away from unrelated illnesses in recent years. Using the (expensive) services of a Solicitor, my sister and I who are joint Administrators were finally issued a Grant of Administration/Probate for all deceased in 2018. In the case of two of our siblings, Capital Acquisition Taxes (CAT) on total assets were paid out by the Solicitor on behalf of all four beneficiaries before the 2018 deadline, however no deductions for solicitor’s fees were made nor were we aware of that possibility. Only the funeral expenses were deducted as on the CA-24, no other debts having been incurred.

It is now time to pay CAT on the assets of our third sibling whose Probate was issued later than the other two, thereby falling under the 2019 CAT payments deadline. A few questions arise: where or how does one list legitimate expenses such as Probate Solicitor fees on the CAT form (IT-38)? A second problem is that if we declare all the outstanding fees incurred (for all 3 siblings) on the upcoming 2019 CAT, these will exceed the actual assets of our third sibling. Is there any way to adjust for the hefty fees which I presume we should have deducted somewhere on the 2018 CAT form? Having already been charged 23% VAT on solicitor’s fees, a further payment of 33% tax is a crippling blow so any relief would be most welcome. Thank you for your help.

 

[jpd]

No, the expenses related to the probate are recovered from the estate, not from the beneficiaries. You can submit a revised CA24 - presumably you could ask th solicitor to do this for another hefty fee!

 

[Astramund]

No, the expenses related to the probate are recovered from the estate, not from the beneficiaries. You can submit a revised CA24 - presumably you could ask th solicitor to do this for another hefty fee!

Thanks for this, jpd. Such a relief when the three CA24’s were deposited and then the Probates issued after 4-5 months of waiting. Now seems it’s back to square one...I’ll try to do them myself this time, Maybe I can avoid revising the first CA24 since this sibling had no CAT to pay when the threshold was applied? But this way I guess no fees could be deducted so wouldn’t beneficiaries be losing out on potential assets? Does anyone know what is the deadline for submitting a revised CA24? And my final question: does Revenue issue a refund for overpayment of CAT? So grateful for any help with this dilemma.

 

[MARTYM8]

Sorry am I misunderstanding things here. I assumed legal fees relating to probate were an allowable deduction for CAT - so you only pay CAT on the net benefit you receive from the estate.

When an executor/solicitor prepares the CA24 inland revenue affidavit they will probably have a fair idea of funeral costs, debts and other costs (e.g. headstones) but not necessarily probate costs or solicitors fees or indeed the executors own costs which are often the responsibility of a third party executor (not always a beneficiary) and won't be definitively known until the end stages? They get deducted from the proceeds you inherit.

Surely you should only pay CAT on what you receive from the estate - and the solicitor gets the solicitor fees not the beneficiary? If your executor hires an expensive solicitor and charges their own costs too - why would you pay tax on what they get?

CAT return due, can I offset anything against this tax?

When completing a CAT return on an inheritance, can I offset against the tax, the cost of Probate, Solicitor's costs, Estate Agent's costs, Executor's costs, etc? Is there anything I can offset or is the Gross inheritance taxed for the full amount less allowance?

www.askaboutmoney.com