HMRC have just released a report prepared by BRMB Social Research into satisfaction with the inheritance tax process among professional and personal customers. I know it sounds unlikely, but most of them are happy bunnies indeed.
According to the report 52% of professionals were "very satisfied" with the service they got from the capital taxes office of the Inland Revenue (as it then was), and 44% of the rest were "fairly satisfied". When seeking information from the Revenue, 54% of personal customers were "very satisfied" and 36% were "fairly satisfied". Even more amazing, 63% of professionals thought the service had improved over the past five years.
I am fairly sure that most other taxes would not get similar markings, so what is different about IHT? It is after all a tax which attracts as high a marking for grief and misery from the Daily Mail as any.
One possible answer is that the 'customers' are a very disparate lot. The professional customers for IHT are largely solicitors dealing with probate. Given the way that solicitors work, their contacts with the Inland Revenue have been with CTO and with Inland Revenue Trusts.
The personal customers are likely to be encountering IHT for the first time, probably on the death of a parent, and in most cases would have no tax to pay. The survey base for personal customers was very small: where there is IHT to pay on an estate, they would normally leave it to the solicitor anyway. If one were to take a more cynical view, one might also expect the personal IHT customers to be more inclined to believe whatever they were told. Furthermore, in almost all cases they will have paid nothing on the nil rate band and 40% on the rest. Anybody claiming business or agricultural property relief will almost certainly have gone through a professional.
But there is another possible answer. Since the Tory government renamed CTT and injected it with a whole load of old estate duty rules in 1986, IHT has been largely left alone. There has been some shuffling about with anti-avoidance provisions but nobody has even changed the tax rates, and when the Revenue got serious about avoidance it did it by mucking about with income tax and the pre-owned asset legislation instead. IHT is a dog's breakfast of a tax, but at least it is a familiar dog's breakfast.
Just compare that with the other end of the capital taxes office's workload ' capital gains tax. Year on year changes mean that the person in the street has absolutely no chance of understanding the tax, let alone trying to work it out. How many times has taper relief been changed since 1998? Have you tried to explain to someone how the tax works on the sale of a property which has been in the family since before 1982 and was let for some of the time and occupied by the owner for some of the rest - and that is not an uncommon scenario.
Add to that the fact that if you want advice on IHT you can ring someone at HMRC who actually understands the tax, because they deal with it all the time, and compare that with the experience of ringing your friendly (but not local) HMRC call centre about CGT, where you know that the person dealing with it cannot possibly deal with anything more complicated than "it's a tax you pay when you sell something". CGT is a tiny part of the workload of HMRC officers in the field, and for that reason has never been well handled. When I was in the Revenue, a CGT query usually meant a frantic search for an inspector prepared to take the call - and that was when you could ring a tax district.
There's a lesson in this: a stable tax system means happier customers, and almost certainly better performance all round.
For the full report go to www.hmrc.gov.uk/research/inheritance-tax-process.pdf
But be warned, it's 72 pages long.
Simon Sweetman
