.png)
.png)
In their August IHT and Trusts Newsletter, HMRC included the following item:
'From now until 31 March 2008, when looking at forms IHT200 received on a death, we will be paying particularly close attention to lifetime transfers. Not only will we be looking at estates where a form D3 has been completed giving details of gifts or other transfers of value, but we will be reviewing other aspects of estates which we know can give rise to lifetime transfers'.
These may include:
- joint assets — gifts can arise on a transfer into joint names or where a joint owner receives the benefit of withdrawals from accounts funded wholly by the deceased
- loans — gifts can arise on the forgiveness of a debt or part of a debt
- movement of funds between multiple bank accounts — this can lead to gifts being overlooked
- inheritance — gifts can arise if there have been redistributions of property inherited by the deceased
- business or partnership — transfers from a business or partnership interest will not necessarily qualify for business relief
- rights under a pension scheme — a gift may arise if acts or omissions by a member of a pension scheme have the effect of increasing the value of benefits passing outside the member's estate at the expense of his own estate.
'Where the information provided about these aspects is unclear, or incomplete, there is an increased likelihood that we will ask for further information or seek an explanation of what has occurred.
'In appropriate cases we will open an enquiry and ask you for further information to satisfy ourselves that all gifts have been included. We will tell you if the estate is one that has been selected for enquiry in this way. Where it appears that the accountable persons have been negligent in not disclosing a gift in the IHT200 we will consider whether a penalty is appropriate.'
A number of national newspapers have written about this, but in essence HMRC are doing what they should be doing, i.e. checking information submitted. The tone of the item is, however, potentially intimidating, particularly to taxpayers who may not have detailed knowledge of the system.
An HMRC spokesman says in relation to the item: 'The bereaved are not being targeted. There has been no change to the IHT rules or the way we administer them. We want to help administrators to get their accounts right first time saving them time and helping them to avoid any potential issues at what will already be a difficult time.'
It seems that the idea behind the item is to point out areas which are likely to cause problems and to emphasise that HMRC will help where it can. Francesca Lagerberg of Grant Thornton says that while this particular item is unlikely to have any other significance, it would 'not be surprising if, at some stage, HMRC did carry out a review of potentially exempt transfers with a view to removing them altogether'.
This is particularly in the light of the FA 2006 which considerably reduced PETs, so that they could be made only to individuals and to disabled trusts.
