The gift of protection

John Bunker and Kirstie Williamson consider how to best advise your clients on their options to mitigate their exposure to inheritance tax

In July 2019, the Office of Tax Simplification (OTS) released its second report on simplifying the design of inheritance tax (see bit.ly/3qe8jsA). The report explores the main complexities and technical issues that arise from the way the tax works, making recommendations which could streamline gift exemptions, change the way the tax works in relation to lifetime gifts to make it both simpler and more intuitive, and address distortions in the operation and scope of reliefs such as those for business property and agricultural property.

Whilst none of its recommendations have yet been implemented, with the disruption of Covid-19 preventing any tax changes, they cannot be overlooked when advising clients on their options to mitigate their exposure to the tax.

About the author

Kirstie Williamson

Kirstie Williamson has 19 years’ experience in a variety of tax roles. She now manages a specialist team dealing with tax compliance for a large number of trusts, and advises clients on planning for and mitigation of inheritance tax. She has contributed to the Law Society’s new Inheritance Tax Planning Handbook, edited by John Bunker and Anthony Nixon.

Also in this edition

Jeremy Woolf considers the continued relevance of European Union law to indirect taxes

The transitional period under the Withdrawal Agreement between the United Kingdom and the European Union has now expired. Apart from Northern Ireland, where there are ongoing obligations under the Northern Ireland Protocol to the Withdrawal Agreement, there are no ongoing treaty obligations to continue applying EU law.

Keith Gordon looks at a case in which an unexpected capital gains tax bill led to a taxpayer suing her father

I should make it clear that this is a case with which I had some background involvement. In 2013, HMRC amended the tax return previously made by the Ellen Morris 1990 Settlement so as to assess approximately £1 million of capital gains tax. It was HMRC’s case that the trust had participated in what is often known as the ‘Round the World’ tax scheme in the course of the 2002/03 tax year.

Lauren Marlow provides a simple guide setting out how to be an executor, tackling the main concerns for those who have not undertaken the role before

If you are appointed as an executor when the appointment is unexpected or you have not carried out the role before, it is likely you will have a lot of questions. Ten of the most typical questions that I am asked are set out below with my response to provide a simple guide on how to be an executor. As each administration can differ greatly, this guide is not a substitute for legal advice on your specific circumstances.

1. What is an executor?

HMRC’s Solicitor’s Office and Legal Services explain how statutory reviews can assist taxpayers who disagree with an HMRC decision

Statutory reviews were introduced in 2009 as part of the Tribunals Reform programme. The reviews are aimed at customers who disagree with an HMRC decision. Statutory reviews are carried out within HMRC’s Solicitor’s Office and Legal Services department (SOLS). The review is conducted by officers who are entirely outside the management chain of those making the disputed decisions. Both the Office of Tax Simplification and the House of Lords have said that HMRC’s Review function provides a valuable service to customers.

The benefits of a statutory review

Dave Murray considers how we can keep tax multilateralism alive in an ever-changing world

In October, the OECD released a suite of documents outlining proposals to revolutionise the international tax framework, including two Blueprints (one on each ‘Pillar’ of its ‘Digitalisation of the economy’ project). The release was described by member countries of its Inclusive Framework as ‘a solid foundation for developing a global, consensus-based solution to the tax challenges of the digitalisation of the economy’.

Sally Jones and Andy Bradford consider the practicalities of implementing the UK-EU Trade and Cooperation Agreement

On 24 December, negotiations to conclude the UK-EU Trade and Cooperation Agreement (TCA) ended. The TCA will govern the UK and EU’s economic and trading relationship now that the Brexit transition period has come to an end.

The TCA (or the avoidance of a no deal outcome) does not remove the need for businesses to make changes to their operations – far from it – but it does bring some certainty on many of the new trading rules that will apply after the end of the transition period, most notably tariffs.

Neil Warren considers the new reverse charge rules for the construction industry and the practical VAT issues that will be relevant to builders who trade with other builders from 1 March 2021

It will be a case of third time lucky when the new reverse charge rules for the construction industry are finally introduced on 1 March 2021. As many readers will know, previous introduction dates of 1 October 2019 and the same date in 2020 were delayed by HMRC for very good reasons, coronavirus being the reason for the second delay. In this article, I will focus on practical issues about how the rules will work in practice, including the new concept of a ‘5% disregard’.

Services covered by new rules

HMRC answers the most frequently asked questions on the HMRC Inheritance Tax Helpline

Has my form IHT421 been issued?

HMRC now emails all IHT421s for grants in England and Wales directly to HM Courts and Tribunals Service. You can expect HMRC to do this within 15 working days of receiving your IHT400 or payment of the tax due on delivery of the account, whichever is later. If tax is due on the estate, HMRC will confirm that it has issued your IHT421 in writing once it has processed the account.
If you want to check that HMRC has received your form IHT400, you should wait for at least 20 working days from the date you sent the form, before contacting HMRC.

Help needed to complete the IHT400 and IHT400 schedules

Bill Dodwell considers who is best placed to supply information to HMRC

In 1944, the Pay As You Earn system was introduced and about 12 million adults started to find their employer deducting tax from their salaries and wages. The system was introduced due to government and Inland Revenue concern that the old system of payment in arrears did not work well for the much larger working population now subject to income tax. There was a particular issue that the high wartime wages would be reduced after the war – and taxpayers might not have put money aside to pay their taxes.

An evolving system

Michelle Robinson and Rachel McEleney set out the issues you should consider now in order to be ready for tax-year end

The end of the 2020/21 tax year is fast approaching. We have outlined in this article various tax points that individuals, business owners and their families may wish to consider ahead of the tax year-end on 5 April 2021. Unless otherwise stated, all rates and bands below are for the 2020/21 tax year.

This article only comments on taxation: financial and/or pensions advice may be required from appropriately regulated persons.

Income tax

The gift of protection

Kirstie Williamson

John Bunker

VAT: domestic reverse charge

Keeping it in the family

The perfect storm

Reasonable care and excuse

Deferral of retirement benefits

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The gift of protection

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Kirstie Williamson

John Bunker

VAT: domestic reverse charge

Keeping it in the family

The perfect storm

Reasonable care and excuse

Deferral of retirement benefits