Reports warn of a fresh flurry of anti-avoidance crackdowns by the UK concerning ways of reducing inheritance tax bills. An official has told this publication such fears are exaggerated. A law firm says a new anti-avoidance drive is being launched.
It may seem a few weeks away, but the onset of autumn in the UK usually sees an increase in media speculation about the horrible things governments intend to do to “crack down” on forms of tax avoidance as the parliamentary season looms. A media report has raised alarms of increasingly aggressive moves against taxpayers, while a law firm has also highlighted risks around avoidance schemes.
Yesterday, the Daily Telegraph newspaper reported that the UK coalition government intends to stop wealthy people “benefiting from complicated schemes that allow them to dramatically reduce the amount they will owe after their death”. The report said that “under plans put out for consultation, HM Revenue & Customs would have powers to subject people minimising inheritance tax to “accelerated payment” laws, meaning they would be forced to pay up front if officials suspect them of using new schemes to avoid tax”. It went on to note that some experts fear that taxpayers will be treated as “guilty until proven innocent”.
When WealthBriefing asked HM Treasury, the department responsible for authorising any such move by HMRC, about the story, a spokesperson said: “The government will not ask be asking taxpayers to make an accelerated payment of inheritance tax - which is due on death - during their lifetime. As part of the ongoing consultation, we are seeking views on tackling inheritance tax avoidance schemes and no final decisions have been taken”.
"The proposals would only affect a small minority of wealthy individuals actively seeking to avoid inheritance tax. Accelerated payments will not apply more widely to IHT trust charge changes, unless the trust arrangement is part of a tax avoidance scheme disclosed under DOTAS,” the spokesperson said, adding: “Under inheritance tax rules a couple do not pay tax on the first £650,000 ($1.091 million) of their estate on death.”