As a result of tightening of anti-avoidance legislation HMRC are extending the remit of DOTAS to cover more IHT schemes.

While IHT has always been subject to DOTAS (the Disclosure of Tax Avoidance Schemes) the test for it to apply has been quite restrictive and in practice only applied to trust based schemes.

However, draft regulations could result in individuals and their advisers being forced to disclose in all but the most basic IHT planning strategies as a result of the new tests. The new baseline “gateway” test will simply be whether there was a tax avoidance motive.

The draft regulations state that disclosure will be required of all arrangements the main purpose of which might reasonably be expected to secure an IHT advantage where either the arrangements involve one or more contrived or abnormal steps without which it may not be possible to obtain the IHT advantage, or where a person would be unlikely to enter into one or more elements of the arrangements other than to obtain an IHT advantage.

The tests are extremely wide and could catch a number of planning opportunities which to date have been considered benign and non aggressive. While there is an exclusion for will planning, many areas are likely to be subject to risk.

There is also a question as to the validity of any consultation where draft legislation is already published and unlikely to change, but this seems to be the standard process for HMRC consultations these days.

For draft regulations in full, see http://bit.ly/1Rb8CND. Consultation closes on 10 September 2015.