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In its response to the consultation on inheritance tax (IHT) requirements for excepted transfers and settlements, which was launched by HMRC on 12 July 2007, the Chartered Institute of Taxation (CIOT) says that whilst it welcomes any improvement in the current system, the proposals do not go far enough in simplifying compliance.

Under the self-assessment regime which applies to IHT, there is currently no penalty for failure to file an account when no tax is payable. In the original consultation document HMRC propose to impose a reporting requirement despite IHT not being chargeable.The Institute however, believes it would be simpler, consistent and logical to retain a reporting requirement only for circumstances where IHT is chargeable.

The CIOT does, however, think that it is helpful for the Government to be aware of the amounts being settled in trust over certain de minimis limits, in order to inform future policy making. At present, form 41G provides basic information on thenature of the trust and the value and type of assets settled. Therefore, there is no need to have an IHT form as well where no immediate tax is payable. The Institute suggests that the form 41G is more widely publicised and made mandatory, since Trusts Offices do not always take a consistent policy.

The consultation time limit has been severely criticised by the CIOT. This consultation was issued on 12 July 2007 and sought comments by the end of August. The HMRC Code of Practice (COP) requires a 12-week consultation period. The Institute acknowledges that pressing circumstances will sometimes require a shorter period, but the COP indicates that this should be the exception and should be avoided wherever possible. The COP also indicates that departments should consider giving a longer consultation period at certain times, for example during the summer holiday period. Given the subject matter of this consultation, there appears to be no justification for abandoning the normal time limits.

Link 

Chartered Institute of Taxation: Response document