Anti-abuse tax rules set to include IHT

Inheritance tax (IHT) is set to be included in new anti-abuse rules designed to tackle tax avoidance schemes.

The government launched a consultation on the proposed General Anti-Avoidance Rule (GAAR) on 12 June, which would apply to the main direct taxes and national insurance. It also proposes an extension of the rule to inheritance tax.

The GAAR is based on recommendations made in a report by Graham Aaronsen to HM Treasury last November.

He said that while sensible and responsible tax planning was “an entirely appropriate response to the complexities of a tax system such as the UK’s”, a moderate GAAR would “deter contrived and artificial schemes.”

The consultation document says that unless the GAAR covered inheritance tax, there could be “difficult interactions”, for example if capital gains tax was included in the GAAR and IHT was not.

 But it adds: “The government recognises that IHT operates differently to the other direct taxes and has complex interactions with legislation around trusts and estates.

“Arrangements for estates may be put in place a long time before the event that triggers a tax charge. There may, therefore, be particular issues to consider around how the GAAR will operate in relation to IHT.” 

The consultation will run for 14 weeks until 14 September, with a summary of responses to be published in the autumn.  There will be a further consultation on proposed draft legislation in the autumn with a view to introducing legislation in Finance Bill 2013.

If you want more information then please contact accountants in Lichfield. 

Link: http://www.hm-treasury.gov.uk/tax_avoidance_gaar.htm