It’s one of the great oxymorons of our times that we have a Quango called the Office of Tax Simplification (OTS).

Gordon Brown started the rot, but George Osborne took it to a whole new level. We now have the most complicated tax system on the planet with each successive budget layering new rules on top of old and introducing additional nuances for tax experts to ponder over.

It was drowned out by the volume of spending promises emanating from the Tory leadership candidates, but it looks like a long overdue review of Inheritance Tax may become a reality. This is the most blatant example of fiscal drag in the entire tax system. Originally called Death Duties, this tax mainly fell onto landed gentry in the decades before and after the second World War. It’s one of the reasons why the National Trust has such a stunning portfolio of country homes – better to give the family pile to them than convert it into flats to pay the tax bill…

Today, anyone who has owned a family home in the South East for a generation or two finds themselves in the cross hairs of the HMRC rifle. The threshold of £325,000 has remained unchanged for a decade, except for a complicated piece of Cameron/Osborne chicanery around an additional allowance for passing the family home down the bloodline.

Even more pathetic are the gift allowances, unchanged since the 1980s. You can give away a whopping £3,000 a year without paying Inheritance Tax – a figure that should be £11,900 if the allowance had kept pace with inflation. Parents can contribute £5,000 to a child’s wedding (hands up anyone who has married off a daughter on a budget of five grand in the last few decades) and grandparents can give £2,500 without alerting the taxman. If you have a large circle of friends, you can transform their lives by giving each of them £250.  If your estate is worth, say, £3 million, you’d only need 12,000 friends and you could pass it on without paying a penny in inheritance tax.

Any other gifts are only exempt from IHT if you survive for seven years after making the transfer. Trouble is, we’re not very good at predicting our own mortality and most of us are dreadful procrastinators who keep putting off any and all decisions. Those that involve recognising our imminent demise get even shorter shrift.

So one of the proposals from the OTS is welcome – a cut in the qualifying period from seven years to five. Incredibly, this would only have accounted for £7 million of the £4.38 billion collected in IHT during the 2015/16 tax year.

One of the consequences of such an unfair tax is that smart people look for ways of avoiding it. This is a key area of focus when we refer members to our own tax expert, who can put structures in place to all but eliminate any IHT liability. Another tactic has been to use business property relief which was designed to help family businesses avoid a big tax bill when they pass the enterprise to the next generation. That has been tweaked to use AIM listed company shares as another way of taking assets out of your estate for IHT purposes. This has come to the attention of the OTS and will be one of the topics that is looked into as part of the review.

Will it happen? Or will it be kicked into the long grass by Philip Hammond’s replacement? Only time will tell. But if the OTS wants to justify its existence at a time when trust in our political system is at an all-time low, there could be no better place to start than a review of the out-dated and over complex rules around Inheritance Tax.

The OTS should enlist the help of our meerkat friends and keep it ‘simples’.

Until next time