Tuesday, January 24, 2006



HMRC have issued a press release telling us that a Mr Gray has been sentence by Bournemouth Crown court to three years imprisonment for false accounting in respect of inheritance tax returns. They say that this is the first inheritance tax prosecution in England. Bearing in mind that inheritance tax has been with us since 1986 (when capital transfer tax was renamed inheritance tax) I find it extraordinary that it has taken almost twenty years before any criminal prosecutions have taken place. It only took two to three years before the first criminal prosecution for tax credit fraud. It does seem an odd sense of priority for the HMRC Prosecution Office to have homed in on prosecuting the poor, who in general are the people entitled to tax credits, but to have seemingly dismissed the possibility of prosecuting the rich for inheritance tax fraud. It seems to me most unlikely that there has been no inheritance tax fraud in the last twenty years other than that committed by Mr Gray.

For income tax purposes, where the Revenue much prefer to accept a monetary settlement than to prosecute people, they do at least prosecute some cases to make an example of people to discourage others from fraud. It is odd that they do not seem to have done the same with inheritance tax. This gives the appearance, which I sincerely hope is an incorrect impression, that tax criminals who can afford to buy off the tax authorities are allowed to do so, but those who cannot afford to do so are prosecuted.

Indeed the prosecution of Mr Gray seems from the HMRC press release not to be so much because he completed the inheritance tax return incorrectly, but because he in fact forged the deceased’s will to make himself the major beneficiary in place of the charities to which the deceased had intended the bulk of the estate to go.

Robert W Maas


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