The Chartered Institute of Taxation (CIOT) has welcomed the announcement that the UK's Office of Tax Simplification (OTS) is to undertake a review of inheritance tax.
Philip Hammond, the UK Chancellor of the Exchequer, addressed the OTS in a letter sent January 19, 2018, asking to hear of its proposals for simplification, "to ensure that the system is fit for purpose and makes the experience of those who interact with it as smooth as possible." He instructed the OTS that the review should focus on technical and administrative issues, such as the process of submitting returns and paying tax due, as well as practically issues around routine estate planning and disclosure. He suggested it could also look at how current gift rules interact with the wider IHT system and whether the current framework causes any distortions to taxpayers' decisions surrounding transfers, investments, and "other relevant transactions."
John Bunker, Chair of CIOT's Succession Taxes Sub-Committee, said: "Modern IHT dates back to the 19th century when the Government introduced estate duty, a tax on the capital value of land. But the rules around it have grown piecemeal and not always in a logical fashion. A thorough review of its calculation and administration is long overdue."
"The review must begin with an understanding that you cannot add simplicity, rather you must remove complexity. It may be beyond the scope of this review, but the creation of an additional residence nil rate band for an estate has undoubtedly added extra complication to the inheritance tax regime. While we recognize this is the deliberate product of a clear government policy objective – indeed a manifesto commitment – we think it worth investigating, in the context of this broader review, whether there are alternative ways of achieving the Government's objectives without adding so much additional complexity to the system."
"Exemptions to inheritance tax are generally a complex area. We see definite potential for simplification here, possibly by a larger annual exemption in place of all the others such as marriage and small gifts. We would also suggest the OTS look at the complex interaction of Agricultural Property Relief and Business Property Relief in its review."
He added: "There is a good case for simplifying how trusts are taxed in relation to inheritance tax. A general review of trust taxation was announced by the Chancellor in the Autumn Budget. How the OTS's review will interact with this remains to be seen. It is important that both the OTS and the wider review do not lose sight of the fact that most trusts are set up for non-tax reasons such as protecting capital and vulnerable beneficiaries."
Switzerland's lower house of Parliament on May 29, 2018, approved DTAs with Kosovo and Pakistan.
The Moroccan Government has approved for ratification a DTA with the Republic of the Congo, it announced on May 29, 2018.
Argentina has approved a protocol to its DTA with Brazil, the Argentinian Official Gazette reported on May 23, 2018.
Brazil's upper house of Parliament on May 30, 2018, approved a protocol updating the DTA with Norway.
Hong Kong and Finland on May 24, 2018, signed a DTA.
Legislation ratifying a new DTA between Russia and Japan was submitted to the Russian State Assembly (the Duma) for approval on May 22, 2018.
Vietnam and Macau signed a DTA on April 16, according to a statement released by the Vietnamese Ministry of Finance on May 11, 2018.
Talks are continuing on a DTA between Jordan and Switzerland, according to a statement released by Jordan's Foreign Ministry on May 14, 2018.
The Czech Senate approved a law to ratify the DTA with Ghana on May 17, 2018.
The Philippines-Thailand DTA entered into force on March 5, and the Philippines' DTA with Sri Lanka on March 14, the Filipino tax agency announced on May 17, 2018. They will be effective from January 1, 2019.
Jordan's Minister of Planning and International Cooperation met with Luxembourg's Finance Minister to discuss enhanced cooperation between the two countries in a number of areas and agreed to seek to conclude a DTA.
Uzbekistan and Lithuania are to engage in talks towards a DTA, Uzbekistan's state news agency reported May 9, 2018.
Two Georgian committees approved the text of a DTA with Saudi Arabia and forwarded it for ratification, according to a May 17 announcement on the Georgian parliament's website.
Hong Kong gazetted an order to ratify its DTA with Saudi Arabia on May 18, 2018.
Talks are continuing on a DTA between Turkey and Afghanistan, according to a statement released by Turkey's Ministry of the Interior on May 11, 2018.
A new DTA between Finland and Spain will enter into force in January 2019, according to a May 18, 2018, announcement from the Finnish tax authority.
Andorra and Cyprus have signed a DTA, Andorra's Government announced on May 18, 2018.
Singapore and Brazil signed a DTA on May 7, 2018.
A DTA between Morocco and the Congo was signed on April 30, 2018.
The Mauritius Revenue Authority on March 19, 2018, published Government Notice No. 36 of 2018, confirming the entry into force of a Protocol updating its DTA with Barbados.
Legislation allowing for a DTA between the Netherlands and Malawi was ratified on April 30, 2018.
Switzerland and Brazil signed a DTA on May 3, 2018.
Slovakia on April 27, 2018, published Notice 123/2018 confirming the entry into force of its DTA with Ethiopia.
The Indian Government on May 7, 2018, announced that the DTA Protocol signed with Kuwait entered into force on March 26, 2018. A notice was published in India's Official Gazette on May 4, 2018.
The DTA between Slovakia and Iran became effective on May 1, 2018.