Lord Palmer of Childs Hill
Main Page: Lord Palmer of Childs Hill (Liberal Democrat - Life peer)
Lord Palmer of Childs Hill
To ask Her Majesty’s Government what assessment they have made of (1) the amount of inheritance tax paid, and (2) the measures being taken to avoid paying any such tax; and what plans they have, if any, to ensure that inheritance tax is paid promptly.
Baroness Penn (Con)
My Lords, from our latest estimates, inheritance tax receipts for 2019-20 totalled £5.1 billion. HMRC has a duty to collect the correct taxes as laid down by Parliament, and it carries out compliance checks into inheritance tax returns to ensure that customers pay the right amount. Inheritance tax is payable within six months of the date of death and must be paid before probate is granted and the assets in the deceased’s estate are distributed.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister for her reply. She refers to the UK’s total annual £5 billion inheritance tax, which is paid only by the wealthy and the middle-class, who have less ability and wealth to avoid death duties by imaginative and creative tax plans. Virtually no IHT is paid by the very wealthy in the UK. Tax planning is sensible, tax evasion is illegal, but creative tax avoidance is also unacceptable. The Office of Tax Simplification was asked to review the tax. Can the Minister tell us about its recommendations and the Government’s response to them, in particular on how to curb the creative tax industry and those who use it?
Baroness Penn
My Lords, the Government thank the Office of Tax Simplification for the work it has done; they are looking at the results of its two reports very carefully. I reassure the noble Lord that since 2011, inheritance tax and trusts have been brought into the disclosure of tax avoidance schemes—DOTAS—regime, which means that any new and innovative inheritance tax avoidance scheme involving transfers into trust must be disclosed to HMRC, and gives the Government powers to take any enforcement actions necessary.