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Disclosure of IHT avoidance: regulations made
Practical Law UK Legal Update 9-504-7267 (Approx. 4 pages)
Disclosure of IHT avoidance: regulations made
by PLC Private Client
| Published on 08 Feb 2011 • United Kingdom |
Regulations have been made to extend the disclosure of tax avoidance schemes (DOTAS) regime to cover inheritance tax on lifetime transfers by individuals to relevant property trusts, with effect from 6 April 2011. (The Inheritance Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2011 and The Tax Avoidance Schemes (Information) (Amendment) Regulations 2011.) (Free access.)
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HM Treasury has made regulations to extend the disclosure of tax avoidance schemes regime to cover inheritance tax on lifetime transfers by individuals to relevant property trusts. The extension will take effect from 6 April 2011. Before this date, HMRC intends to publish a "white list" of existing schemes and arrangements that will not need to be disclosed under the new rules. In practice, the white list is likely to determine the extent to which practitioners involved in day-to-day inheritance tax planning will need to have regard to the new disclosure rules. (The Inheritance Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2011 and The Tax Avoidance Schemes (Information) (Amendment) Regulations 2011.)
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HM Treasury has made two statutory instruments to extend the disclosure of tax avoidance schemes (DOTAS) regime to cover inheritance tax (IHT) on lifetime transfers by individuals to relevant property trusts:
- The Inheritance Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2011 (SI 2011/170) (the description regulations).
- The Tax Avoidance Schemes (Information) (Amendment) Regulations 2011 (SI 2011/171) (the information regulations).
The description regulations describe the type of notifiable arrangements that will have to be disclosed for IHT purposes, while the information regulations set out the administrative arrangements and time limits for making the actual disclosures. Both sets of regulations are accompanied by an explanatory memorandum incorporating a Taxes Information and Impact Note (TIIN), and will come into effect on 6 April 2011. Primary legislation is not necessary, because the Finance Act 2004 includes IHT within the DOTAS regime and allows HM Treasury to define notifiable arrangements for IHT by regulation (sections 306 and 318, Finance Act 2004).
Draft versions of the description and information regulations were published on 27 July 2010 as part of HMRC's IHT disclosure consultation, which closed on 20 October 2010 (see Legal update, Disclosure of IHT avoidance: HMRC consultation). On 6 December 2010, HMRC published a summary of responses to the consultation and announced its intention to make a number of amendments to the draft regulations in recognition of concerns expressed by respondents (see Legal update, Disclosure of IHT avoidance: consultation responses published). The regulations, now in final form, incorporate these amendments.
Yet to be published is the promised "white list" of existing schemes and arrangements that will not need to be disclosed under the new rules because they are covered by the "grandfathering" provision in regulation 3 of the description regulations. HMRC are still working with representative bodies to create this list. In practice, the list is likely to determine the extent to which practitioners involved in day-to-day inheritance tax planning will need to have regard to the new disclosure rules.
New HMRC guidance for scheme promoters, users and IHT practitioners is also expected before the 6 April 2011 commencement date. To follow future developments, see 2010 autumn statement to Finance Act 2011: legislation tracker: Inheritance tax: adding to disclosure regime.
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