Inheritance tax (IHT) schemes are to be scrutinised by the government in order to reduce cases of tax avoidance, it has emerged.
As part of the move,
IHT will now be incorporated in the Disclosure of Tax Avoidance Schemes (Dotas), which has been operational since 2004.
It is hoped that the inclusion in Dotas – which requires financial advisors to report tax arrangements that are not standard – will prevent people from avoiding payments.
Alex Henderson, tax partner at PricewaterhouseCoopers, commented: "It suggests there could be seemingly straightforward things technically falling within the disclosure regime.
"It could include discounted gift trusts or something more complex, for example, for a client who is divorced and needs to set up single funding and equal provision for two people."
He added that there are some common
IHT practices which the HMRC is keen to eradicate, such as clients keeping information about their plan confidential or arrangements in which the planner does not receive payment if the arrangement does not work.
However, the new regulations will not apply to those set up with good practice or insurance-based schemes.
