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Insolvent estates

If the estate is insolvent and there are assets, they should be realised and a dividend paid to estate creditors. Generally an estate is only administered if there are funds. See DMBM585280 for un-administered estates.

Formal administrations

When an order has been made under the Administration of Insolvent Estates of Deceased Persons Order 1986 the case will be dealt with by either:

• the Insolvency Claims Handling Unit (ICHU) for direct taxes
• the National Insolvency Unit (NIU) for indirect taxes.

ICHU will:

• lodge a claim in the normal way
• advise Estates & Trusts Office/Bradford Enforcement Unit as appropriate of their action, as in INS1704.

NIU will:

• lodge a claim for any VAT or other indirect tax debt
• advise Estates & Trusts Office/Bradford Enforcement Unit as appropriate of their action, as in INS1704.

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Informal administrations

»Ê¹ÚÌåÓýapp personal representative should administer the estate according to insolvency legislation and acknowledge HMRC’s claim.

If the personal representative tells you there are insufficient funds in an estate and either:

• makes an offer of part payment
• advises you the estate is insolvent but there will be no formal administration

• ask them:

• for details of the estate’s assets and liabilities
• for details of any property jointly owned by the deceased before they died
• if a payment will be made pro-rata with payments to the other creditors.

If it is clear that the estate is insolvent and there is no formerly jointly owned property:

• allocate any payment as in DMBM210110Ìý
• write off the balance Type 2.

If you have evidence of formerly jointly owned property, see DMBM585285.