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Finance Bill

I can assure the right hon. Lady that I feel unable to do any such thing, having heard no such thing. Let me deal with a couple of specific points. The right hon. Lady suggested that it was bizarre that such issues were being raised now and asked why they had not been raised in greater depth during the consideration of the Finance Act 2004. She will have information to hand, but I understand that form IHT205 and the guidance notes for completing it were published only in November 2004, after the Finance Act 2004 had completed its passage. On the basis of what we have seen published, what we have seen in practice and what practitioners and, indeed, non-professional executors are reporting, we have sought to raise the issue today. The right hon. Lady told the House that new clause 8 would give the Revenue the option to require a return. In response to my attempt at a point of order, Mr. Speaker advised me that I should address this question in my closing remarks. Perhaps the best thing that I can do is to read out the opening paragraph of regulation 6 of the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004, as it would be amended by new clause 8, and let the House decide whether or not she is correct. Paragraph (1) would say:"““Subject to paragraph (3), a person who by virtue of these Regulations is not required to deliver to the Board an account under section 216 of the 1984 Act of the property comprised in an excepted estate, may produce the information specified in paragraph (2) to the Board in such form as the Board may prescribe.””" That does not suggest any doubt at all to me that the option lies with the taxpayer, not with the Revenue. The right hon. Lady has confused the question of the change to treatment for what were approximately 30,000 excepted estates under the old rules—those estates that fell just below the inheritance tax threshold of between £240,000 and £275,000. I acknowledged quite readily in my opening remarks that the compliance burden on those estates has been reduced, by allowing them to complete the shorter—everything in terms of Inland Revenue forms is relative—form, IHT205, rather than the full return form, which is IHT200. The right hon. Lady has deliberately ignored the fact that the definition of an excepted estate has been widened to include all estates above £5,000, which require probate. The practical effect is that, while 30,000 estates will enjoy a reduction in the compliance burden, some 270,000 estates, according to the most recent year’s figures, will suffer an increase in the burden by having to make a return using IHT200. Contrary to what the right hon. Lady says, the minimum number of questions required is not set out. I have already listed the questions that must be answered: details of the deceased’s occupation and surviving relatives; gifts that the deceased has made; pensions; assets overseas; cash, including money in the bank, building society and national savings; value of household and personal goods; quoted and unquoted stocks and shares; insurance policies; bonuses; mortgage protection policies; money owed to the person who has died; residences; partnerships and business interests; debts of the deceased; and funeral expenses. That is not the minimum information required. We understand the need for a return of information for estates that are just below the margin, but in broadening the scope of excepted estates under the 2004 regulations to include all estates that require probate which are below the inheritance tax threshold, the right hon. Lady has, deliberately or otherwise, swept into the net hundreds of thousands of very small estates and created a huge new burden, however she seeks to dress it up today. By interchanging the old definition of an excepted estate, which refers only to the 30,000 estates just below the IHT threshold, and the new definition, which includes some 300,000 estates that require probate and are below the IHT threshold, the right hon. Lady has effectively thrown up smoke around the debate, but she has not answered the challenge that we have put to her. The right hon. Lady says that all that is being asked is that people make a return to show they have done the calculation. Of course people must do the calculation before asserting that an estate is not chargeable to tax—a prudent person would always expect to do so—but sadly, for many small estates people will not have to spend very long computing whether the estate is worth £275,000; the question will be whether the estate is worth £10,000 or £12,000. In those cases, the imposition of completing such a form is an unnecessary and onerous burden at what will be a very difficult time for bereaved families dealing with these matters. I intend to ask my hon. Friends to support the new clause in the Division Lobby.