Tax practitioners can look forward to a “simplification” of IHT according to a letter sent by Philip Hammond to the OTS recently. Here’s what he said:
“I am writing to acknowledge the OTS’s recent interest in the Inheritance Tax regime. Inheritance Tax, and the system within which it operates, is particularly complex, and I would like to request that the OTS carry out a review into the IHT regime. I would be most interested to hear any proposals you may have for simplification, to ensure that the system is fit for purpose and makes the experience of those who interact with it as smooth as possible.”
“The review should include a focus on the technical and administrative issues within IHT, such as the process of submitting returns and paying any tax due, as well as practical issues around routine estate planning and disclosure. It could also look at how current gift rules interact with the wider IHT system, and whether the current framework causes any distortions to taxpayers’ decisions surrounding transfers, investments and other relevant transactions.”
Practitioners involved in estate planning, particularly IHT planning, will no doubt be disturbed by Mr Hammond’s correspondence. Either their valiant efforts at making sense of the present “complex” legal framework of IHT will become redundant, filed away like other extinct tax knowledge, or the simplification will raise other issues that require the unpicking of carefully thought out planning to be replaced with new thought out planning. Either way, we should probably keep an eye open for the terms of reference for the OTS’s review when published.