Inheritance Tax planning

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I've been asked how I could say as a practicing accountant that I have not done Inheritance Tax planning.

The answer I gave on the Moral Maze was, of course, instantaneous. But since then I have struggled to think when or if I ever offered advice on Inheritance Tax planning and can't recall doing so over many years.

There are good reasons. First my client base have tended to be of an age where there was little inclination to do this.

Second, I have always been willing to discuss Inheritance Tax mitigation. But when doing so follow the maxim a doctor told me which was:

A good doctor knows how to operate
An excellent doctor knows when to operate
The best doctor knows when not to operate.

What I mean is this. I'd sit the client down. Give them a coffee. Listen to the misinformation they had on the tax and then talk through the facts with them.

First of all I'd show how little tax they might owe.

Second, I'd show how much they could leave after tax.

Third I'd discuss when they were planning to die. In most cases it was far off: too far off for any reasonable plan for financial security to be put in place.

Fourth I'd discuss how often law changes and would stress that anything we could do now would most likely be out of date by the time they died.

Fifth I'd explain that any planning would quite probably be expensive. And that cost might be on-going.

Sixth, I'd show that given the uncertainties no one could guarantee who would win from the planning, bar me. This reflects the serious concern I have about the motivation of many in this market - much of which I think unethical.

Seventh I'd explain all the allowances available in law (the use of which I would exclude from Melanie Phillips question - this is not planning - this is compliance).

Eighth I'd make sure they had a will that reflected their real wishes.

Ninth I'd remind them that gifts to charity were tax free.

And after all that we'd had several coffees and they would have decided there was nothing more they wanted of me bar a letter summarising what we'd discussed that they could give to a solicitor to make sure their will was updated.

Now if that's planning I gave the wrong answer to Melanie Phillips.

But I think she meant 'avoidance' by the term she used. Ensuring people comply with the spirit of the law, which is what I think I've explained above is principled (as she said I was). It's avoidance that is not.

And I'll say this. I never had a client complain. And they happily paid for the advice.

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