Mon - Fri: 9am - 5:30pm
0113 887 8432
September 28, 2015

Anti-Avoidance DOTAS rules extended to Inheritance Tax

UPDATE: HMRC has shelved plans to extend DOTAS rules to IHT

HMRC have announced that the Disclosure of Tax Avoidance Schemes (DOTAS) rules will be extended to Inheritance Tax.

This means that arrangements which an “informed observer” could conclude are an Inheritance Tax avoidance scheme or arrangement would be disclosable under DOTAS. Draft legislation states that an arrangement will be considered to be a  tax avoidance scheme where condition 1 and either condition 2 or condition 3 have been satisfied:

  1. Where the main purpose of arrangements is to obtain an advantage in relation to inheritance tax , and either
  2. One or more elements of the arrangements would be unlikely to have been entered into but for the obtaining of the tax advantage, or
  3. The arrangements involve one or more contrived or abnormal steps without which the tax advantage could not be obtained

The kind of schemes that HMRC will consider are arrangements which seek to avoid Inheritance Tax on lifetime transfers, and schemes entered into during a person’s lifetime which are designed to reduce the value of their estate.

The use of existing reliefs and exemptions, such as the spouse and civil partner exemption should not be disclosable.

Like other DOTAS provisions, the penalties for non-compliance are financial rather than criminal.

The new rules will only apply to schemes which are entered into after the changes take affect and will not apply to those already in place.

Contact us today to discuss your tax requirements.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram