The Office for Tax Simplification has released the first of two reports into its review of Inheritance tax with a focus on the process for IHT in estate administration. The main recommendation is one of digitalisation, which considering HMRC is now making income tax digital, is of little surprise to most.
At a time of bereavement, the Probate and IHT process can be complicated and a simplification of the overall process would be welcome provided it was not at the compromise of financial security and increased fraud.
In conjunction with the proposed amendment to Probate fees, after a long period of consistency and volumes of paper, the entire estate administration process is heading for rapid change to reflect modern society and we will of course keep you up to date with any changes and proposals that occur.
The summary of recommendations raised are set out below:
1 KEY RECOMMENDATION: The government should implement a fully
integrated digital system for Inheritance Tax, ideally including the ability to
complete and submit a probate application.
2 Pending implementation of a digital system, HMRC should make changes to
the current forms to reduce and simplify the administration of estates,
including introducing a very short form for the simplest estates and updating
the conditions that must be met to be able to complete a short Inheritance
3 HMRC should carry out a general review of its Inheritance Tax guidance with the aim of it being:
• targeted to reduce concern for those who worry unnecessarily
• clear, consistent and easy to navigate
• linked or located with other relevant guidance, including probate
• expanded to include worked examples, a road map, timescales and a tax calculator
• sufficient for complex estates to apply the law and practice correctly
• In line with some other taxes, HMRC should also consider increasing the use of other education channels such as webinars.
4 HMRC should introduce a system issuing automated payment receipts and, if
necessary, further refine the recently introduced 12 week response period,
during which any enquiries into the information contained on the form will be
5 HMRC should liaise with HM Courts and Tribunals Service on options for
streamlining the payment and probate process.
6 HMRC should review the requirement for trustees to submit forms when no
Inheritance Tax is due, and no reliefs or exemptions are claimed.
7 Until a digital system can be implemented, HMRC should make changes to the existing form for lifetime charges and trusts. These include: splitting up the
current form so there is a simple and tailored form for each occasion;
improving the guidance available for completing the form and calculating the
tax; and aligning the signature requirements for trustees with other parts of
the tax system.
8 HMRC should introduce a system issuing automated receipts for IHT100 forms and Inheritance Tax payments made alongside the form, and consider
introducing a review period during which an enquiry into the information
contained on the IHT100 form will be initiated.
(source Office of Tax Simplification)