[Politics] Inheritance Tax

Shropshire Seagull said:

By "non-financial assets" do you mean things like aircraft, yachts, paintings, property, etc. as in non-financial products that hold a monetary £££ account balance? aka fixed assets?

I think we all expect UK property ownership to be of HMRC interest and Land Registry are a feeder to DCDM. I can give you another example within the UK. CAA's Aircraft Register database lists the owner(s) of every UK registered aircraft. On a regular basis (use your imagination) CAA feed data to DCDM for every change in ownership, aka buyers and sellers. Let's say this chap, Joe Bloggs, is now the registered owner of a £2m Lear jet. DCDM will add this to his financial wealth footprint and some background calculations will be done. The simple outcome (there are many, but let's keep this simple) is that DCDM will confirm that Mr Bloggs had alternative wealth that aligned to a £2m aircraft purchase. If not, a risk is raised on the system that Mr Bloggs either used undeclared income or was gifted the aircraft. On the other side of the ledger (the seller) DCDM will check that the receipt of the £2m is reflected in that persons footprint. If lose ends emerge there is potential for investigation.

Anything else of significant value is shared in a similar way within the UK. Veteran and vintage cars are tracked via DVLA V5 registered keepers, changes will be fed to DCDM. I think there is a similar thing in the artworld for very expensive paintings. You can use your imagination to think of other assets that fall in to a similar style of high value.

Every single financial institution in the UK feeds regular data to DCDM - they create a footprint of the overview of your wealth, for everyone, but likely only 1% of the population are likely to have a tax yield gap of significance to interest HMRC. But the 1% membership changes as does the Bar-height for HMRC to trigger investigations.

As for outside of the UK, I'm not privy (above my security clearance) on the detailed content of the data that comes in to HMRC via the reciprocal Tax Treaty countries but I would not be surprised if it is massively different to the type of data in DCDM. Sure some less administratively advanced countries may be less diligent, but if I owned e.g. a property elsewhere in the world (there will be some exceptions obviously) I'd be fairly certain HMRC would know about it even if I haven't told them myself.

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Nobby Cybergoat said:

Do you think that if IHT was charged at 100% with a NRB of £0, we'd all get used to the idea quite quickly?

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Shropshire Seagull said:

By "non-financial assets" do you mean things like aircraft, yachts, paintings, property, etc. as in non-financial products that hold a monetary £££ account balance? aka fixed assets?

I think we all expect UK property ownership to be of HMRC interest and Land Registry are a feeder to DCDM. I can give you another example within the UK. CAA's Aircraft Register database lists the owner(s) of every UK registered aircraft. On a regular basis (use your imagination) CAA feed data to DCDM for every change in ownership, aka buyers and sellers. Let's say this chap, Joe Bloggs, is now the registered owner of a £2m Lear jet. DCDM will add this to his financial wealth footprint and some background calculations will be done. The simple outcome (there are many, but let's keep this simple) is that DCDM will confirm that Mr Bloggs had alternative wealth that aligned to a £2m aircraft purchase. If not, a risk is raised on the system that Mr Bloggs either used undeclared income or was gifted the aircraft. On the other side of the ledger (the seller) DCDM will check that the receipt of the £2m is reflected in that persons footprint. If lose ends emerge there is potential for investigation.

Anything else of significant value is shared in a similar way within the UK. Veteran and vintage cars are tracked via DVLA V5 registered keepers, changes will be fed to DCDM. I think there is a similar thing in the artworld for very expensive paintings. You can use your imagination to think of other assets that fall in to a similar style of high value.

Every single financial institution in the UK feeds regular data to DCDM - they create a footprint of the overview of your wealth, for everyone, but likely only 1% of the population are likely to have a tax yield gap of significance to interest HMRC. But the 1% membership changes as does the Bar-height for HMRC to trigger investigations.

As for outside of the UK, I'm not privy (above my security clearance) on the detailed content of the data that comes in to HMRC via the reciprocal Tax Treaty countries but I would not be surprised if it is massively different to the type of data in DCDM. Sure some less administratively advanced countries may be less diligent, but if I owned e.g. a property elsewhere in the world (there will be some exceptions obviously) I'd be fairly certain HMRC would know about it even if I haven't told them myself.

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Shropshire Seagull said:

By "non-financial assets" do you mean things like aircraft, yachts, paintings, property, etc. as in non-financial products that hold a monetary £££ account balance? aka fixed assets?

I think we all expect UK property ownership to be of HMRC interest and Land Registry are a feeder to DCDM. I can give you another example within the UK. CAA's Aircraft Register database lists the owner(s) of every UK registered aircraft. On a regular basis (use your imagination) CAA feed data to DCDM for every change in ownership, aka buyers and sellers. Let's say this chap, Joe Bloggs, is now the registered owner of a £2m Lear jet. DCDM will add this to his financial wealth footprint and some background calculations will be done. The simple outcome (there are many, but let's keep this simple) is that DCDM will confirm that Mr Bloggs had alternative wealth that aligned to a £2m aircraft purchase. If not, a risk is raised on the system that Mr Bloggs either used undeclared income or was gifted the aircraft. On the other side of the ledger (the seller) DCDM will check that the receipt of the £2m is reflected in that persons footprint. If lose ends emerge there is potential for investigation.

Anything else of significant value is shared in a similar way within the UK. Veteran and vintage cars are tracked via DVLA V5 registered keepers, changes will be fed to DCDM. I think there is a similar thing in the artworld for very expensive paintings. You can use your imagination to think of other assets that fall in to a similar style of high value.

Every single financial institution in the UK feeds regular data to DCDM - they create a footprint of the overview of your wealth, for everyone, but likely only 1% of the population are likely to have a tax yield gap of significance to interest HMRC. But the 1% membership changes as does the Bar-height for HMRC to trigger investigations.

As for outside of the UK, I'm not privy (above my security clearance) on the detailed content of the data that comes in to HMRC via the reciprocal Tax Treaty countries but I would not be surprised if it is massively different to the type of data in DCDM. Sure some less administratively advanced countries may be less diligent, but if I owned e.g. a property elsewhere in the world (there will be some exceptions obviously) I'd be fairly certain HMRC would know about it even if I haven't told them myself.

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Hugo Rune said:

If you are in a family of 4, (which I am in), your family entitlement (from birth) would be 4 houses. That’s one house to live in, a holiday home and two for rent until your kids are old enough to move out and live in them.

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dazzer6666 said:

In reality though, how many of that 1% will actually get investigated? HMRC doesn’t have the manpower to do it….

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dazzer6666 said:

In reality though, how many of that 1% will actually get investigated? HMRC doesn’t have the manpower to do it….

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Hugo Rune said:

If you are in a family of 4, (which I am in), your family entitlement (from birth) would be 4 houses. That’s one house to live in, a holiday home and two for rent until your kids are old enough to move out and live in them.

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Westdene Seagull said:

I did ( and maybe still am ) and in my case, as executor, we're talking either just below or just over the £1m allowance. HMRC accused me of under valuing properties in the estate. Probate had already been issued when HMRC got involved. Strangely all the properties sold below my estimated value, or more accurately the Estate Agents estimation. If the estate had been charged IHT on the final sale price of assets rather than guessimates no IHT would have been due. HMRC still haven't told me the result of the investigation ( I might still be under investigation for all I know ) - they don't know their arse from their elbow. If IHT must be charged ( and I don't think it should be ) then it should at least be charged on the true value of the estate not estimates.

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Westdene Seagull said:

I did ( and maybe still am ) and in my case, as executor, we're talking either just below or just over the £1m allowance. HMRC accused me of under valuing properties in the estate. Probate had already been issued when HMRC got involved. Strangely all the properties sold below my estimated value, or more accurately the Estate Agents estimation. If the estate had been charged IHT on the final sale price of assets rather than guessimates no IHT would have been due. HMRC still haven't told me the result of the investigation ( I might still be under investigation for all I know ) - they don't know their arse from their elbow. If IHT must be charged ( and I don't think it should be ) then it should at least be charged on the true value of the estate not estimates.

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A mex eyecan said:

I and one other act as attorneys and will eventually become executors for an elderly relative who has recently moved from their home and into permanent care.

Once they’ve been in there two or three months we intend to sell the property as attorneys and hopefully get rid before they die so as to avoid probate and all its challenges when a property is involved.

Hopefully things will pan out well enough to get this done as we appreciate we are fortunate to hopefully get this window.

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A mex eyecan said:

I and one other act as attorneys and will eventually become executors for an elderly relative who has recently moved from their home and into permanent care.

Once they’ve been in there two or three months we intend to sell the property as attorneys and hopefully get rid before they die so as to avoid probate and all its challenges when a property is involved.

Hopefully things will pan out well enough to get this done as we appreciate we are fortunate to hopefully get this window.

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dazzer6666 said:

In reality though, how many of that 1% will actually get investigated? HMRC doesn’t have the manpower to do it….

Click to expand...

A mex eyecan said:

I and one other act as attorneys and will eventually become executors for an elderly relative who has recently moved from their home and into permanent care.

Once they’ve been in there two or three months we intend to sell the property as attorneys and hopefully get rid before they die so as to avoid probate and all its challenges when a property is involved.

Hopefully things will pan out well enough to get this done as we appreciate we are fortunate to hopefully get this window.

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CoolTed said:

And it seems you can be screwed all ways. If the house sells above the estimation (at time of Probate) then additional IHT can be due. Also, in that same situation, if the sale is delayed and enough time has passed, the Estate can be liable for CGT.

I agree with your point that IHT should ultimately be paid on actuals, but that might be too logical and reasonable for HMRC.

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Westdene Seagull said:

I did ( and maybe still am ) and in my case, as executor, we're talking either just below or just over the £1m allowance. HMRC accused me of under valuing properties in the estate. Probate had already been issued when HMRC got involved. Strangely all the properties sold below my estimated value, or more accurately the Estate Agents estimation. If the estate had been charged IHT on the final sale price of assets rather than guessimates no IHT would have been due. HMRC still haven't told me the result of the investigation ( I might still be under investigation for all I know ) - they don't know their arse from their elbow. If IHT must be charged ( and I don't think it should be ) then it should at least be charged on the true value of the estate not estimates.

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Shropshire Seagull said:

Is the roll of the dice many folk play ....
I should add that HMRC also do a quota of randomly selected investigations as well, so even the small-change tax dodgers might be at risk of an investigation.

In essence, evading taxes is a gamble, you might get caught, you might get away with it.
I expect most of us have experience of e.g. sole traders who may do a bit of cash-in-hand to knock of the 20% VAT.
So, absolutely, HMRC cannot resource to investigate every case. So they do a mix of possible high yield and random.

As Fletcher (from porridge) used to say: "If you can't do the time, don't do the crime."

And HMRC fully endorse the mantra of "Ignorance is no excuse for the law"

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Herr Tubthumper said:

If HMRC used “true values”, by which I assume you mean what the property sells for, this would be open to abuse. Suppose I own an apartment estimated at 500k which I want to gift to friend A when I die. Using the estimate there’s 50k IHT. Now, suppose I die and my estate sells the apartment to Mr A for £1. Under your proposal the true value is £1 and no IHT is due. I appreciate this is an extreme hypothetical case but hopefully you can see the flaw in your idea?

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Herr Tubthumper said:

If HMRC used “true values”, by which I assume you mean what the property sells for, this would be open to abuse. Suppose I own an apartment estimated at 500k which I want to gift to friend A when I die. Using the estimate there’s 50k IHT. Now, suppose I die and my estate sells the apartment to Mr A for £1. Under your proposal the true value is £1 and no IHT is due. I appreciate this is an extreme hypothetical case but hopefully you can see the flaw in your idea?

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drew said:

Bizarre!

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Westdene Seagull said:

As you say - a very extreme example and one that would be picked by the solicitors involved along with Land Registry - and remember the big database @Shropshire Seagull has described that is linked to LR.

The system at the moment means estates get taxed when they shouldn't. Just to use my parents estate for example - all the properties combined sold for more than £100k less than they were valued at. Reason being that each and every one, at point of survey, needed work doing.

Tax of any kind should be paid based on true values. You don't pay a guessimate on VAT, Stamp Duty, Income Tax, Fuel Duty .... why IHT ?

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