HM Revenue and Customs (HMRC) is set to crack down on inheritance tax avoidance schemes.
HMRC believes there are a number of previously undetected inheritance tax planning schemes where “substantial” sums are at risk.
The tax authority is aiming to close loopholes that allow tax avoidance ruses to escape detection, with avoidance scheme promoters appearing to turn their attentions towards inheritance tax as tax planning in other areas becomes more difficult.
In a recent consultation paper, aimed at increasing the awareness of tax schemes, HMRC said inheritance tax is currently subject to relatively few disclosure rules.
“There is a risk that IHT [inheritance tax] attracts those who wish to abuse the tax system by engaging in tax avoidance activity,” said the HMRC.
HMRC is keen to catch inheritance tax schemes entered into during a person’s lifetime that are designed to reduce the value of their estate. However, the authority insisted it would not impact on existing reliefs and exemptions “used legitimately in many arrangements by the vast majority of people”.
Accelerated payments rules have meant, across all taxes, avoidance schemes are becoming harder to escape scrutiny.
HMRC said it had received information that some avoidance scheme promoters were aiming to protect clients from the demands simply by refusing to disclose existing tax avoidance schemes.
Some offshore scheme promoters have suggested they will no longer comply with the disclosure rules, while many UK-based promoters are weighing up a move offshore to escape the rules.
David Gauke, financial secretary to the Treasury, believes it was vital that the rules on disclosure of tax avoidance schemes – introduced in 2004 – kept pace with the accelerated payments measure and the “ever-evolving avoidance market”.
Call us today on 0800 0523 555 or complete our enquiry form in order to book a FREE initial consultation