Among the issues the OTS says will be in scope are the process around submitting IHT returns and paying any tax, including cases where it is clear from the outset that there will be no tax to pay, and the various gifts rules including the annual threshold for gifts, small gifts and normal expenditure out of income, as well as their interaction with each other and the wider IHT framework.

The review will also look at other administrative and practical issues around routine estate planning, compliance and disclosure, including relevant aspects of probate procedure, in particular in relation to situations which commonly arise.

It will consider the complexities arising from the reliefs and their interaction with the wider tax framework, the scale and impact of any distortions to taxpayers’ decisions, investments, asset prices or the timing of transactions because of the IHT rules. Also, relevant aspects of the taxation of trusts, or interactions with other taxes such as capital gains tax, and the perception of the complexity of the IHT rules amongst taxpayers, practitioners and industry bodies.

Additionally, OTS says the review will consider whether devolution of tax powers within the UK has implications and especially whether the Scottish legal system impacts any recommendations, and will take account of relevant international experience.

It is set to provide a call for evidence early in 2018 and will publish a report in the autumn, providing an initial evaluation of aspects of the current IHT regime, and what they mean for taxpayers, HMRC and the Exchequer and offering specific simplification recommendations for government to consider.

At the time the review was announced, John Bunker, chair of CIOT’s succession taxes sub-committee, said a thorough review of IHT calculation and administration was ‘long overdue’, with the aim of removing complexity.

‘Exemptions to inheritance tax are generally a complex area. We see definite potential for simplification here, possibly by a larger annual exemption in place of all the others such as marriage and small gifts.

‘We would also suggest the OTS look at the complex interaction of agricultural property relief and business property relief in its review,’ Bunker said.

George Bull, senior tax partner at RSM said: ‘As the scope of inheritance tax has increased, so has its complexity. Exemptions and reliefs, such as the additional residence nil rate band, have added to that complexity.

‘At the same time, some exemptions such as the annual exemption, the marriage exemption and the small gifts exemption have not kept pace with inflation. We would like to see these restored to realistic levels so that most people don't have to worry about them.

 ‘It is also important to review IHT in the context of the competing and wide-ranging regimes elsewhere in the world. The US is one of the more extreme examples where potentially up to $22m can be passed to the next generation tax free.’

OTS Inheritance Tax Review scoping document is here.

Report by Pat Sweet