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TAX NEWS: Scots face confusion over new trust rules. By Dan Martin

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2nd May 2006
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The government's new inheritance tax charges on trusts and life assurance policies will cause confusion in Scotland due to the way they are drafted, accountants have warned.

In a joint letter to HMRC, the Institute of Chartered Accountants of Scotland (ICAS), the Law Society of Scotland and the Scotland Branch of the Society of Trust and Estate Practitioners said the new provisions are drafted in English legal terms which don't have clear meaning in Scotland.

The organisations pointed out that many trusts can't be changed without court approval and there is already a waiting time because of pressure on Scottish courts.

They claimed that the new proposals are "fundamentally wrong" and will be perfectly damaging for bereaved families and vulnerable individuals.

ICAS' Derek Allen said those who want to avoid the new tax charges may need to alter the terms of trusts and rewrite their wills which will be "costly and often difficult."

"Hard-working families may have to wait for the congested Scottish Courts system to approve changes to a trust."

Derek Allen, ICAS

The joint submission recommended that the government reverts to its previous policy of treating trusts as broadly neutral for tax purposes.

ICAS' Derek Allen said: "[Scottish residents will] have to wait to discover the outcome of the translation of the new rules from English law to Scots law.

"Secondly, many hard-working families who in some instances will have suffered the death of a relative may then have to wait for the congested Scottish Courts system to approve changes to a trust."

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