Trustees, beneficiaries and their advisers will welcome the news that HMRC has published its consultation document exploring the ways in which IHT charges on “relevant property” trusts (eg. discretionary trusts) might be “simplified”.
Anyone involved in the administration of relevant property trusts will appreciate how much work and complexity can be involved in calculating the IHT charge when assets leave a trust or at each ten-year anniversary of the trust’s establishment. For smaller trusts in particular, the burden and cost of compiling data, completing tax calculations and submitting returns to HMRC can be disproportionate to the tax payable.
As a result, HMRC has highlighted a number of possible areas for review, to include:
– The reliance on historic data in the calculations;
– Reducing the administrative burden on trustees;
– Ensuring an outcome closer to the Government’s intended policy;
– Improving HMRC’s forms and worksheets; and
– Introducing online calculators for use in the majority of cases.
It remains to be seen what, if any, “simplification” measures will result from the consultation, since HMRC has made clear that any proposals which would result in a lower tax charge will not be accepted; but it will certainly be interesting to see what responses HMRC receives once the consultation closes on 5th October 2012.
The outcome of the consultation will be announced later this year, with a view to enacting legislation, if required, in the Finance Bill 2014.