Behind the Numbers: An Accountant’s Perspective
It’s often assumed that tax matters simply stop when someone passes away. In reality, however, a taxpayer’s finances still need careful attention, and the process can be quite different from a standard tax return. Recently, I dealt with my first final tax return for a deceased person, and it was a real learning experience.
When an Accountant’s Role Comes to an End
A solicitor colleague, with whom I regularly exchange work, recently passed over a case involving the final tax return of a deceased taxpayer. Until then, I hadn’t personally dealt with this type of return.
One key point surprised me straight away. When a taxpayer dies, their existing accountant automatically ceases to be their tax agent. At that stage, the solicitor handling probate appoints an accountant to prepare the final tax return.
As a result, the professional relationship changes. The engagement is between the solicitor and the accountant, not between the accountant and the deceased client.
Working with Solicitors During Probate
Because the accountant relies on the solicitor’s client due diligence, an additional reliance letter of engagement is required. This confirms that the accountant can rely on the checks already carried out by the solicitor.
Although this may seem like a small administrative detail, it’s an important part of ensuring compliance and protecting everyone involved.
Understanding the Final Tax Return for a Deceased Person
Unlike a normal tax return, the final tax return covers an administration period, not a standard tax year. This period runs from the day after the date of death until the estate is fully administered and passed to the beneficiaries.
As a result, even if the tax return shows an end date of, for example, 5 April, it may still include income received after that date. This can feel counterintuitive at first, but it’s a key distinction when dealing with estates.
How the Final Tax Return Is Submitted
Another notable difference is how the return is submitted. The final tax return is issued to the next of kin, but it still shows the deceased person’s details.
Importantly, this return must be submitted by post. Unlike most personal tax returns, it cannot be filed online, which often comes as a surprise to families dealing with the process for the first time.
Why Accountants Never Stop Learning
This experience was a strong reminder that, in accountancy, learning never really stops. That’s particularly true in a small practice, where we need a broad understanding of many different areas, rather than specialising in just one department.
While larger firms may work in narrow specialisms, smaller practices often get to see the bigger picture — and that variety is what keeps the work interesting.