Death In Service Inheritance Tax

Lord Robathan Excerpts

Tuesday 17th April 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)]

It is a pleasure to speak under your chairmanship for, I think, the first time, Mr Hood. The topic is important and sensitive, and I am grateful for the opportunity to respond.

We in the Ministry of Defence strive very hard to provide appropriate support to bereaved families when one of our serving or former service personnel loses their life. I am always saddened to hear of cases in which families feel that they have not received the support that they should at the time of their loss. The background to the case of Mr Thomas is a tragedy and I extend my sympathy to his family, who are still most upset about his death and the issues raised. The passing of time does not always ease the pain of bereavement, particularly when it is worsened by the feeling that the support provided at the time was not sufficient. I assure the right hon. Member for Delyn (Mr Hanson) that the support provided to next of kin and other grieving relatives continues to improve.

When a service person dies in service, an appropriate representative will be appointed from the casualty’s own service as the prime point of contact for the next of kin, and in some instances the emergency contact, if considered appropriate. That person will be a dedicated officer known as the visiting officer, and they will guide and assist the next of kin in repatriation and funeral procedures—I regret to say that that is all too often with Operation Herrick—and will help with any questions the family may have. The visiting officer provides a crucial liaison between families and the services, which continues for as long as it is needed. A veterans’ welfare officer will also be appointed from within the Service Personnel and Veterans Agency to assist the dependants of the deceased. They can provide advice and guidance on the comprehensive package of benefits that may be available under the armed forces pension and armed forces compensation schemes, brought in by the previous Government, of which the right hon. Gentleman was a member, and on other more wide-ranging issues, such as housing and benefit entitlements from the Department for Work and Pensions.

Although some defence charities, such as SSAFA Forces Help or the Royal British Legion, cannot make direct or unsolicited contact with service families, they can provide long-term support to bereaved service families who approach them, including a support group consisting of bereaved relatives meeting on a regular basis to offer support to each other.

The whole Government recognise that service personnel such as Mr Thomas warrant special consideration in acknowledgment of the particular debt of gratitude owed to them for service given in the cause of national defence and international peace. We are aware of the sacrifices made by those who have risked their lives and suffered hardship in facing the challenges of military service. On 16 May 2011, the Secretary of State for Defence published the armed forces covenant—a new tri-service document and the first of its kind. It sets out what service personnel and their families can expect from the Government and the nation in recognition of what we ask them to do to keep us safe. The Government are determined to remove disadvantages encountered as a result of service and, by publishing the covenant, we have established the right direction of travel.

The case of Nigel Lawrence Thomas is a very sad one and, again, I extend my condolences to his parents and other family members. Mr Thomas proudly served his country as a member of the Royal Air Force until he was discharged in 2004. His life was then tragically cut short by chronic myeloid leukaemia and secondary conditions in March 2010. From previous endeavours on behalf of Nigel’s mother, Mrs Davies, the right hon. Gentleman will be aware that, subsequent to the sad loss of her son, she first made enquiries about an exemption from inheritance tax at the Service Personnel and Veterans Agency in June 2010.

In recognition of the particular debt of gratitude that we owe to our former service personnel, it is only right and proper that in certain circumstances special consideration be given as to whether a deceased person’s estate should be exempt from inheritance tax. The right hon. Gentleman described some such conditions. A deceased service person’s estate may be exempt from inheritance tax if, under delegated authority from the Secretary of State for Defence, my officials certify that section 154 of the Inheritance Tax Act 1984 applies. Under the Act, such certification can be given when the deceased has died from a wound inflicted, accident occurring or disease contracted at a time when they were on active service against an enemy, or on service of a warlike nature. Certification may also be given in instances in which a service person dies from a disease contracted at some previous time if the death were due to or hastened by the aggravation of a disease during a period of such service. If such certification is given, my officials will recommend to Her Majesty’s Revenue and Customs that an estate should be exempt from paying inheritance tax. There is, however, no automatic exemption from inheritance tax for veterans. Deaths in retirement resulting from natural causes, road traffic accidents, or injuries or illnesses that were not contracted during or aggravated by war or warlike service do not qualify for an exemption. Equally, if individuals have a wound or illness arising from their service that might have eventually killed them but they die from a wholly unrelated cause, if the wound or illness played no part in their demise, their estate cannot be certified as exempt from inheritance tax.

Mr Thomas served in Cyprus from 1989 until 1992, and it is recognised that for at least part of that period he was operating in a role in support of operations in the Gulf during the first Gulf war. From his service record, however, it is evident that during that time he did not undertake deployed service in Saudi Arabia, Kuwait or Iraq, or come into direct contact with Iraqi forces. As such, my officials were unable to recommend that his estate be considered for exemption from inheritance tax, as the criteria defined under section 154 of the Act had not been met. A request by the family for the payment by my Department of funeral expenses in respect of Mr Thomas was approved because, in the view of an MOD medical adviser, it could not be demonstrated beyond reasonable doubt that some aspect of his service did not cause the condition that led to his death. That is, however, a quite separate issue from the matter of whether an estate should or should not be eligible for an exemption from inheritance tax. The criteria involved are quite different, and it would be wrong to assume that the decision to pay funeral expenses undermines the decision by my officials not to recommend an exemption. Similarly, the award of the Gulf medal for the first Gulf war was made on the basis that people were supporting, full-time, the operation, and not on whether they were engaged in warlike service.

The right hon. Gentleman asked me to look again in particular at the legislation. I assure him that I will, on his behalf, because he has raised an important case. First, as requested, I will review the case and look in particular at the accident referred to in his speech. Secondly, I will review the operation of section 154 of the Inheritance Tax Act 1984, in conjunction with my colleagues in the Treasury. He particularly asked me whether I was happy to go the extra mile for the family of Nigel Thomas, whose case the right hon. Gentleman has articulated so well today. I certainly will and hope that he may be reassured by that.

[Mr Hanson]

If I may respond to the Minister’s comments, I thank him personally, on behalf of the family, for agreeing to review the case of Mr Thomas. I also thank him for his promised review of section 154 of the Act. In my speech, I asked whether the Minister could report back to the House. I should be grateful if he would confirm that he will either write to me or issue a written statement following that review so that we can have some clarity on the outcomes, and if he would let me know the time scale of the review.

[Mr Robathan]

I assure the right hon. Gentleman that I shall reply to him. Time scales, as he knows from his past as a Minister, can sometimes be what I might call slightly fluid, but I shall endeavour to be as timely as possible.