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February 11, 2016
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Extension of DOTAS Rules to IHT Postponed

In light of fierce criticism by professional bodies, HM Revenue & Customs has postponed its plans to extend the Disclosure of Tax Avoidance Schemes (DOTAS) regulations to inheritance tax (IHT).

Under the DOTAS regime, tax avoidance schemes must be disclosed to HMRC if an arrangement’s main purpose is to obtain a tax advantage, and where the scheme falls within one of a number of descriptions, known as 'hallmarks'.

The now withdrawn draft legislation would have meant that the anti-avoidance DOTAS rules would have been extended to cover most types of IHT planning. However, it was felt that in its current form the proposals were too broad in scope and would risk catching ordinary IHT planning products that are not abusive.

Certain IHT schemes currently falling under DOTAS will continue to do so, such as property being held on relevant property trusts where to main benefit is a reduction of the IHT entry charge.

Revised draft proposals will be developed  for further consultation later this year.

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