Draft IHT disclosure rules are potentially wider than for any other tax

The revised regulations attempting to narrow the scope of a new inheritance tax-specific hallmark under the disclosure of tax avoidance scheme (DOTAS) rules are too wide according to Boodle Hatfield.

They will require advisers and their clients to disclose to HMRC all ‘contrived or abnormal’ arrangements designed to save inheritance tax. Those terms are not defined but fall to be judged though the eyes of an ‘informed observer’.

Geoffrey Todd partner in the private client and tax team at Boodle Hatfield said: ‘It can be difficult even for professional advisers to gauge what could be regarded as contrived or abnormal making the rule very uncertain for clients and their advisers to apply in practice.’

Until recently the DOTAS rules applied to just one type of inheritance tax charge on a lifetime transfer into a trust. The government has decided to bring all inheritance tax charges...