HMRC generally cannot charge personal representatives a behaviour based penalty for an error the deceased made, because such penalties count as criminal charges for human rights purposes and a criminal charge cannot be inherited. The tax itself is still collected from the estate, and a penalty can only follow the estate where the deceased had clearly agreed it before death or where the personal representatives make their own errors.

Why can HMRC not simply penalise the executors?

Before 2007, section 100A(1) of the Taxes Management Act 1970 (TMA) let HMRC impose penalties on the personal representatives of a deceased taxpayer. It was repealed by the Finance Act 2007, and HMRC’s Enquiry Manual at EM1350 says the repeal happened because the power was not compatible with the Human Rights Act. EM5002 confirms that the related time limit in section 103(2) went at the same time.

The current position is set out in the Compliance Handbook at CH301150. A deceased person is presumed innocent, and a criminal charge cannot be inherited. HMRC officers must not impose a penalty on the personal representatives for something the deceased did, or failed to do, before death if all three of these conditions apply:

  1. the penalty is one that is classified as criminal for the purposes of the European Convention on Human Rights;
  2. HMRC would need to establish the person’s behaviour, or the absence of a reasonable excuse, for the penalty to apply; and
  3. the deceased would have been personally liable for it.

The tax is a different question. Under section 74 TMA the executor or administrator is liable for the tax chargeable on the deceased, and section 40 TMA sets how far back HMRC can assess them. Our guide to HMRC enquiries after a death explains those time limits; this page concentrates on penalties.

Which penalties does the protection cover?

CH300200 lists the penalties HMRC treats procedurally as criminal for Article 6 purposes. They include every tax geared penalty where behaviour has to be established, including careless behaviour:

  • inaccuracy penalties under Schedule 24 to the Finance Act 2007, paragraphs 1 and 1A, and the penalty for failing to tell HMRC about an under assessment under paragraph 2;
  • failure to notify penalties under Schedule 41 to the Finance Act 2008;
  • late filing penalties for deliberately withholding information under Schedule 55 to the Finance Act 2009, paragraphs 6 and 11;
  • the failure to correct penalty for offshore non compliance and the asset based penalty for offshore inaccuracies.

Fixed and automatic penalties are handled through a separate rule for returns. The Self Assessment Manual at SAM61270 says that where a customer was served with a notice to file and dies before the filing date, any late filing penalty under Schedule 55 must be cancelled, because HMRC cannot show the person incurred a penalty before it became due. HMRC issues a new return to the personal representative instead. If the customer dies shortly after the filing date, the penalties were correctly charged, but HMRC should normally accept an appeal from the personal representatives and cancel them.

When can a penalty still be pursued against the estate?

CH301150 allows one narrow exception. Where the individual’s liability to a penalty was clearly established and agreed with them before they died, HMRC can issue the agreed penalty to the personal representative. The guidance is strict about this:

  • the onus is on HMRC to show the taxpayer had agreed the penalty before death;
  • agreement in principle is not enough if the amount or the behaviour had not been fully settled;
  • officers must take particular care where the agreement or disclosure may have been made when the person’s judgement was affected by illness, and should not charge the penalty where there is evidence of this.

Where the deceased had already appealed a penalty, or the personal representatives appeal one after the death, CH301150 says HMRC should not automatically withdraw it. What happens depends on the nature of the appeal and the strength of HMRC’s evidence.

The fraud guidance follows the same line. TTOG11250 says civil evasion penalties must not be imposed where evidence of possible fraud comes to light only after the death, so a Code of Practice 9 investigation is not appropriate and HMRC should use another method to establish the tax and interest. Where the taxpayer had already made a disclosure under that procedure before dying, HMRC may be able to continue and impose a penalty, but only if it is satisfied it could secure payment and would succeed before a tribunal.

What if the deceased ran a company or partnership?

The protection belongs to the individual, not to a business they controlled. CH301150 says it does not apply to companies or other organisations, so a company can still be held liable for a penalty where the evidence shows the deceased director acted deliberately. What falls away is any personal liability notice making the director personally liable for part of the company’s penalty: if the officer has died, HMRC cannot maintain it. Our page on company officers’ liability for penalties covers those notices.

For partnerships, TTOG11250 accepts the position is less clear cut where a partner dies and others remain, particularly if the dishonest conduct was wholly attributable to the deceased and they controlled the records and returns. HMRC officers are told to take policy or legal advice in those cases.

When are the personal representatives penalised for their own mistakes?

Once someone has died, the people dealing with the estate become responsible for what they send to HMRC. CH301150 says that where an inaccuracy, failure, wrongdoing or dishonest conduct concerning the estate is attributable to the personal representatives after the date of death, HMRC should penalise them in the normal way. Common examples are:

  • The final Self Assessment return. If HMRC issues a new return to the personal representative, SAM61270 sets its filing date as the later of 31 October following the end of the tax year and three months and seven days from issue, and new penalties are based on that date.
  • The inheritance tax account. CH81145 gives the example of a personal representative who estimates bank balances without checking them; HMRC treats that as a lack of reasonable care. See penalties for errors in IHT accounts.
  • Avoidance arrangements. Where a personal representative files a return relying on avoidance arrangements the deceased entered into, paragraph 3A(8) of Schedule 24 reads the rules on disqualified advice by reference to the deceased as well, so advice from the scheme promoter cannot be used to show reasonable care.

A personal representative who files a return knowing it repeats an omission the deceased made is not protected by the deceased’s presumption of innocence. The behaviour being judged is their own.

How is a penalty paid out of the estate?

Section 74 TMA makes the executor or administrator liable for the deceased’s income tax and allows them to deduct what they pay out of the deceased’s assets. In practice any tax, interest and agreed penalty are met from the estate before the beneficiaries receive anything. A penalty under Schedule 24 must be paid within 30 days of the notification being issued (paragraph 13(1A)) and can be enforced as if it were an assessment to tax (paragraph 13(2)).

Two practical points follow:

  • Timing of distributions. The gov.uk guidance on settling debts and taxes warns personal representatives that if they distribute the estate and it then cannot pay a debt, they may have to pay it themselves. Keep enough back until HMRC has finished.
  • Inheritance tax. IHTM28002 allows a deduction for debts the deceased actually owed at death that are legally enforceable and either imposed by law or given for consideration. Income tax owed by the deceased is normally accepted (IHTM28150), though HMRC looks harder at liabilities that arise from an investigation settlement (IHTM28152). See deducting debts from an estate.

How might this work in practice?

Illustration only. Margaret dies in June. Her executor, David, finds statements for a savings account she never declared. HMRC agrees the tax for the years still in time and charges it on David, who pays it from the estate. HMRC does not charge a careless inaccuracy penalty, because it would have to establish Margaret’s behaviour and she cannot answer for it.

Now change the facts. Margaret had met HMRC in March, accepted that her returns were careless and signed agreement to a penalty of a set amount before she died. HMRC can issue that agreed penalty to David, provided it can prove the agreement and there is no evidence her judgement was affected by illness. Separately, if David then files her final return leaving out the same account, any penalty for that return is assessed on him as personal representative for his own behaviour.

What mistakes do executors and their advisers make?

  • Assuming that because penalties cannot be inherited, the undeclared tax does not need to be paid. It does, within the section 40 time limits.
  • Paying a late filing penalty that SAM61270 says should be cancelled because the death came before the filing date.
  • Treating a penalty discussed but not finally agreed before death as binding. CH301150 requires full agreement to the amount and behaviour.
  • Repeating the deceased’s omissions in returns the personal representatives file themselves.
  • Distributing the estate before HMRC has finished and leaving the personal representatives personally exposed.
  • Overlooking a company’s continuing exposure where the deceased director acted deliberately.

For how penalty rates are set when one is charged, see our HMRC penalties table.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.