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Revenue widens search for gifts

HM Revenue & Customs is to collect and collate from other sources other than inheritance tax returns to crack down on gifts.

In its August newsletter, HMRC says that it will start collating information on taxpayers from sources other than inheritance tax returns to help identify those who may have made gifts prior to death which should have been included in an estate.

Gifts made by taxpayers within seven years of their death are considered to be within their estate for IHT purposes.

Accountancy firm Dixon Wilson partner Helen Clark says HMRC’s tightened compliance will make it much easier for the taxman to identify if cash and assets have been gifted but she says: “The problem is that gifts made prior to death are not recorded at that point in time because they may not be taxable until many years later.

“This means that, when completing IHT forms, you are relying on beneficiaries’ memories, which, over a seven-year per- iod, can be fallible.”

Standard Life head of estate planning Julie Hutchison says: “The Revenue has always had information from people’s lifetime tax positions that they might be able to use to compare the position of what is disclosed upon death. This is just part of a general theme towards working smarter to join up the information and use it more sensibly. The Revenue feels that there has not been full enough disclosure and they want to make sure that people who are enjoying lighter compliance are actually entitled to it.”

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