Dealing with tax errors after death: what Personal Representatives (PRs) need to know

Insight • Probate and Estate Administration • Tax Disputes and Investigations

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Where a taxpayer has died, leaving unresolved errors in their tax affairs, the rules for correcting those errors differ from the usual approach. These differences affect the periods that must be reviewed, as well as the time limits within which HM Revenue & Customs (HMRC) can raise assessments.

In practice, death can extend HMRC’s ability to revisit historical tax issues. This creates particular risks for PRs, who are responsible for handling the deceased’s tax affairs as part of the probate and estate administration process.

Standard rules for disclosing tax errors

Under normal circumstances, the time limits for HMRC to raise an assessment depend entirely on the behaviour which led to the irregularity.

For inaccuracies in filed returns these are:

  • Four years where reasonable care has been taken

  • Six years where there has been a failure to take reasonable care

  • 20 years in cases of deliberate behaviour

Where an error relates to offshore matters, extended time limits of 12 years will generally apply, subject to transitional provisions with respect to taxpayers who have taken reasonable care.

Where an individual has failed to notify HMRC of chargeability, and so not submitted a tax return, the time limit is:

  • Four years where there is a reasonable excuse

  • Up to 20 years where there is no reasonable excuse

As an example, if an individual took reasonable care but made an error in their 2021/22 tax return, or failed to notify HMRC but had a reasonable excuse, HMRC would need to have raised an assessment by 5 April 2026.

Rules for a deceased taxpayer

Different rules apply once a taxpayer has died.

As part of their role, PRs are responsible for reviewing the deceased’s historical tax affairs and disclosing any errors. In practice, however, the period that typically needs to be considered is driven by HMRC’s time limits for raising assessments:

  • Where the deceased took reasonable care, HMRC is typically limited to raising assessments for the four tax years prior to death

  • Where there was careless or deliberate behaviour, HMRC can raise assessments for the six tax years prior to death regardless of behaviour type or whether offshore matters are involved

Although these limits relate to HMRC’s ability to raise assessments, rather than imposing a strict statutory obligation on PRs, they effectively define the scope of what should be reviewed and disclosed.

Extended assessment window

Another key distinction between living and deceased taxpayers is the timing of HMRC’s assessments.

For living taxpayers, assessments must be raised within four, six or 20 tax years, depending on the behaviour. However, where the taxpayer is deceased, HMRC has four years from the end of the tax year in which the individual died to raise an assessment, regardless of the behaviour.

This effectively resets the clock and tax years which would be out of scope for living taxpayers can actually be assessable.

Case study example

Bernie files tax returns but fails to take reasonable care, omitting investment income in the 2017/18 tax year. The error is never corrected and Bernie then dies on 2 November 2023 (the 2023/24 tax year). HMRC identifies the inaccuracy on 6 April 2024.

Under normal rules, HMRC would be out of time to raise an assessment, as more than six years have passed.

However, because Bernie has died, HMRC has until 5 April 2028 (four years after the end of the 2023/24 tax year – the tax year in which Bernie died) to raise an assessment.

This applies even if the behaviour had been deliberate.

Risks for Personal Representatives

The extended assessment window can create significant risks for PRs. In many cases, estate administration is completed and assets are distributed within this four-year period. If HMRC subsequently identifies undeclared tax liabilities:

  • Assessments will be issued to the PRs

  • Funds may no longer be available within the estate

  • PRs may need to recover funds from beneficiaries

If recovery is not possible, PRs can become personally liable for the tax due, along with any interest. This makes it particularly important for PRs to carefully review the deceased’s historical tax affairs before distributing estate assets.

When should PRs seek advice?

Professional advice should be considered where:

  • There are concerns about errors in past tax returns

  • Tax returns may be outstanding or incomplete

  • The deceased held offshore assets or income

  • There is uncertainty over historical tax compliance

Early review can help identify and resolve issues before they escalate.

How we can help

Our Tax Disputes and Investigations team works closely with our probate and estate administration specialists to support PRs where more complex or high-risk tax issues arise.

  • Reviewing historical tax affairs, identifying irregularities and advising on disclosure obligations

  • Managing voluntary disclosures and handling any HMRC enquiries or disputes

  • Supporting PRs in understanding and mitigating potential personal exposure

  • Alongside this, our probate and estate administration specialists can manage the wider estate process, including estate reporting, HMRC filings and the distribution of assets.

If you would like to discuss your situation, please complete the form below and a member of the team will be in touch. All discussions are treated in the strictest confidence.

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