Are your clients being forced to pay IHT whilst alive? What’s it all about?

 In Gill's Blog, Tax

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Gill SteelBoth the Daily Telegraph & Daily Mail have run articles in August 2014 saying that savers could be forced to pay IHT while they are still alive under this new drive against tax avoidance. This might be true if there was a chargeable lifetime event which was seen to be avoided by a marketed and disclosable scheme.

With effect from 6 April 2011 schemes which seek to avoid IHT charges associated with the transfer of property into trust came within the disclosure rules – DOTAS. There have been very few IHT disclosures since it was included in DOTAS. HMRC believe this is because of the narrow scope of the existing ‘hallmark’ and also because promoters claim that their schemes are ‘substantially the same’ as pre April 2011 schemes and so outside DOTAS.

The Government now believes there is good reason for including IHT avoidance schemes in the disclosure system and so propose changes. Your clients may have read over the summer a number of stories in the press as a result of the publication of a consultation document by HMRC entitled ‘Strengthening the Tax Avoidance Disclosure Regimes’.

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HMRC also issued a consultation document back in January 2014 ‘Tackling marketed tax avoidance’ which proposed that users of marketed tax avoidance schemes should pay the tax purported to be saved up front in case the scheme is found to be abusive.

To find out more what this might mean to your clients and your estate planning practice I am presenting a webinar ‘Negligence & tax abuse – what should you do about tax advice?’ for LiPs Legal on 9 September 2014 – for more information and to book your place visit the Negligence & tax abuse webinar page.

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