HMRC denies 'IHT crackdown' reports

The taxman has admitted that it was too aggressive by suggesting it was cracking down on inheritance tax rules applied to 'the bereaved' who had had gifts passed to them by deceased relatives.

Following reports this morning that HM Revenue & Customs had launched a crackdown on the seven-year gift rule, it moved to deny that it was changing its rules or how it administered them.

'There has been no change to the IHT rules or the way we administer them,' said an HMRC statement.

Sources within HMRC admitted it had issued a 'poorly worded and aggressive' newsletter that had caused concerns among the tax profession. Those responsible for the newsletter would be 'hauled over the coals' they said.

The document said: 'From now until 31 March 2008, when looking at forms IHT200 received on a death, we will be paying particularly close attention to lifetime transfers.'

However, HMRC sources said that the taxman had not allocated new resources or staff to look at gifts.

Under the seven-year rule gifts made seven years before a person's death are not liable to IHT, but within that timeframe the gift could be liable to 40% tax.

Further reading:

Read HMRC's IHT comments in its newsletter

Read The Telegraph's take on IHT concerns