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Tax Law No Respecter of (Cultural) Tradition

An argument that assets which HM Revenue and Customs (HMRC) said belonged to a deceased man (and were thus subject to Inheritance Tax) were actually owned in whole or in part by his son was rejected by the First-tier Tribunal (FTT) recently.

After the son was subject to a tax assessment of more than £57,000 and penalties of more than £6,000 for failing to comply with a notice from HMRC, he took his case to the FTT. He argued that evidence concerning Indian cultural traditions would support his assertion that a bank account in his father's name containing more than £100,000 was not his father's property (HMRC had originally accepted, somewhat surprisingly, that the son was entitled to half of the money in the account) and that he also owned a half interest in a house, the title to which was his father's alone. The son argued that he had inherited his late mother's half share in the property, but her ownership was never formally evidenced and neither was his inheritance of that share.

The man's accountant, who gave evidence on his behalf, was regarded by the FTT as an unreliable witness and it also considered that legal substance would have to have precedence over cultural tradition, particularly in the absence of any compelling evidence.

The appeal was unsurprisingly rejected.

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