Tax planning 'to come under more scrutiny'

Tax planning 'to come under more scrutiny'

Experts have predicted that those who set up trusts as part of their tax planning strategies may be set to come under more scrutiny.

According to a report in the Financial Times, accountants suggest that prosecutions among those who establish such asset protection measures in order to reduce their inheritance tax liabilities will increase significantly.

The publication noted that industry practitioners had warned the "balance of power" is shifting towards HM Revenue & Customs, which collects and administers all tax paid by individuals and businesses.

Special tax "squads" are said to be in the process of being redeployed as part of a crackdown announced by the government recently.

Meanwhile, those who set up offshore accounts and schemes designed to enhance their asset protection and reduce their tax liability will be analysed more thoroughly.

In addition, as of next April, trusts that are used for inheritance tax planning will be the subject of more detailed focus.

Commenting on the developments, specialist Alan Pearce said they will have a big impact on consumers.

He stated: "This is one of the most significant clampdowns in the past 30 years."

Also commenting on the issue, head of estate planning at Standard Life Julie Hutchison remarked: "The government is primarily concerned with finding new schemes it doesn't know about."

Currently, the threshold at which inheritance tax kicks in is ?325,000 and this has been frozen for the next four years.

During the run up to the election, the Conservative Party announced plans to raise this to ?1 million. However, it was forced to shelve the idea in order to form a coalition with the Liberal Democrats and the subject has slipped away from public discourse.

It is unlikely to resurface in the near future, particularly given the austerity measures being implemented by the administration in a bid to tackle the deficit.

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