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IHT in the spotlight
HM Revenue & Customs (HMRC) has launched a consultation into tackling inheritance tax avoidance associated with trusts.
The consultation, which continues until 20 October, is inviting comment on extending the Disclosure of Tax Avoidance Schemes (DOTAS) regime to the transfer of property into trust.
The DOTAS regime was introduced in 2004 and currently applies to income tax, corporation tax, capital gains tax, stamp duty land tax and national insurance contributions. It is designed to give HMRC early warning of the detail of tax avoidance schemes and identify users of such schemes.
The Finance Act 2010 contained legislation to close down two schemes to avoid inheritance tax when property is transferred into a trust but concern remains that the full extent of such activity is not known.
The consultation document says that including inheritance tax in DOTAS should help to identify schemes and users at an early stage, helping HMRC to target anti-avoidance measures effectively.
Links: IHT consultation
Meanwhile, HM Revenue & Customs (HMRC) has clarified the position on the valuation of wine cellars for inheritance tax (IHT) purposes.
The August issue of the HMRC Trust and Estates newsletter says that “information in the public domain” indicates that wine cellars are valued at the purchase price rather than the value at the date of death for IHT.
But it says that Section 160 of the Inheritance Tax Act clearly states that the value of any property for IHT purposes is “the price it might reasonably be expected to fetch if sold on the open market at that time”.
It adds: “Therefore it is clear that a wine cellar must be valued at its open market value for Inheritance Tax purposes at the time of the relevant occasion of charge.”
Links: Inheritance Tax and Trust Newsletters
