Partially upheld: delay in payment of inheritance tax; administrative handling of disputed estate complaint against HSBC UK Bank Plc

Decision detail

Summary

The estate of Mr B complained that HSBC delayed payment of inheritance tax to HMRC, causing the estate to incur £1,089 in interest charges. The delay occurred because HSBC required evidence that a disputed will matter had been settled before releasing funds, and Mr B1 (the executor) initially refused to provide the mediation settlement agreement citing a non-disclosure agreement. HSBC released the payment on 15 May 2025, approximately seven weeks after the IHT form was submitted. The ombudsman found HSBC's request for documentation was reasonable given the absence of probate and the variable nature of the tax liability, but upheld the complaint in part because HSBC failed to clearly communicate its requirements until 3 April, creating a period of delay for which it should compensate the estate £200.

The Ombudsman's reasoning

HSBC acted reasonably in requesting evidence that the dispute had been settled before releasing IHT funds, as the amount of tax could have depended on which will was valid and the settlement terms affected asset transfer. However, HSBC failed to communicate its requirements clearly to Mr B1 until 3 April, creating a period of delay for which it should bear some responsibility. The ombudsman distinguished between the funeral payment (which HSBC shouldn't have made but was a fixed amount) and the IHT payment (which was variable and dependent on settlement terms). HSBC's requirement for documentation was reasonable given the absence of probate and the complexity of the settlement, but the initial communication failure warranted partial compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website