RSS feedsGiven all the talk of inheritance tax changes in recent months, what is the impact on HM Revenue & Custom’s reporting requirements?
Last year, HMRC published details about proposed changes to the IHT reporting requirements for lifetime transfers and trusts.
The changes were prompted by the new rules for trusts introduced by Finance Act 2006, and are designed to reduce the number of reports that people are required to make to HMRC.
The changes introduced by schedule 20, meant that more transactions involving trusts had to be reported to HMRC.
Taxpayers have to deliver an account to HMRC where an individual makes a transfer during their lifetime which does not qualify as a potentially exempt transfer (PET) or where a chargeable event arises in connection with a relevant property trust (RPT).
Finance Act 2006 restricted the extent to which lifetime transfers into trust qualify as PETs and extended the categories of settlement that are liable to charge as a RPT. HMRC aims to reduce the number of required reports by extending the rules that excuse taxpayers from delivering returns for certain transfers where there is no IHT to pay.
Draft regulations apply to excepted transfers and excepted settlements and are intended to reduce the occasions when a report has to be made. The regulations will be made in early March so that they will be effective for chargeable events from 6 April onwards. HMRC will monitor the new regulations to ensure that they deliver benefits.
ICAEW tax faculty
www.icaew.co.uk
