New disclosure rules for inheritance tax avoidance will come into effect on 1 April 2018. These were announced, without warning, late last year after a long period of silence following a consultation in Spring 2016.
The regulations are an improvement on the consultation proposals, but are still likely to prove difficult to apply in practice. The new rules require advisers (or their clients) to give HMRC early warning of arrangements which an "informed observer" could reasonably conclude are designed to enable a person to obtain an IHT advantage deriving from "contrived or abnormal" steps. It is not clear what an informed observer might regard as contrived or abnormal steps in the context of a person's individual circumstances and we hope there will be some meaningful guidance on this.
The new disclosure requirement broadly only applies to arrangements proposed by advisers or made available or implemented after 1 April 2018, but does not apply to arrangements that are similar to those entered into before that date which were "established practice" accepted by HMRC.
Again, it will be interesting to see the guidance, which is promised before 1 April, on what HMRC regards as acceptable established practice and we will aim to assist in developing that guidance as we did with previous regulations.
However it is clear that going forward anyone advising on inheritance tax planning will need to consider whether they (or their client) has any duty to disclose, not least because there is only a 5 day window for making a disclosure once a notifiable arrangement is made available for implementation.