Book review: McCutcheon on inheritance tax (Sixth Edition)

Saturday, 01 June 2013
By Withers LLP, Aparna Nathan and Marika Lemos

This wonderful book is now in its sixth edition and, by reflecting the law as stated at April 2012, provides a complete update to its predecessor, published three years ago. Much has changed in the three decades since Barry McCutcheon QC wrote the first version of the work that still bears his name. Nonetheless, the current authors acknowledge that the overview of the tax framework now contained in Chapter 1 essentially retains the format of that first edition, and this must say something about the quality of the publication. This book is a detailed work on what every professional needs to know about inheritance tax (IHT) if they practice in that area.

The book is not for the light, general interest or casual browser. It is a serious work, with an impeccable pedigree contained in a sombre hardback over two inches thick that is heavy enough to require two hands to carry. It is not intended to be pocket-size or portable, but rather is a true reference work, with a clarity of style that makes it immensely readable. The current edition spans approximately 1,300 pages, comprises 34 chapters divided into four parts, provides a comprehensive list of the main statute references and pertinent statutory instruments, and tables and cross-references key tax cases up to the date of publication. A particular feature of interest is the key reference, where appropriate, to the HMRC Inheritance Tax Manual. The comprehensive index, logically composed, runs to 61 pages, and that on its own must give an indication of the scale of the matters covered – there truly is no IHT stone left unturned.

The authors explain that the book should be used on two levels to achieve maximum benefit: first as an explanation of the general operation of IHT, and second as a technical commentary on specific issues. As an aid to this, the book is set out in four parts. Parts 1 and 2 provide the general backdrop and introduction to IHT, with part 1 centred on the general IHT application to settled and non-settled property and part 2 focused on the more specialised treatment of settled property in the relevant property regime. Part 3 then deals with various issues that are common to parts 1 and 2 but which are of a more specific and specialist nature, while part 4 deals with the increasingly important international dimension.

As you would expect from a book of this size, the scope of technical coverage is vast; each aspect of IHT is examined in detail, subjected to technical construction and summarised in clear commentary supported by legislative and case references. Several chapters merit special attention by reason of their detail and relevance to current times, namely: Reservation of Benefit (chapter 7), Property Held on Favoured Trusts (chapter 17), Heritage Property (chapter 27), New Anti-Avoidance Measures (chapter 30) and Aspects of International Estate Planning (chapter 34). In my opinion, the latter is particularly well written and thought provoking, as it not only provides a timely reminder of the strength of the forced heirship rules, but also delivers a practical explanation of the use of other foreign structures, such as foundations and usufructs, as an alternative to trusts.

This is not a cheap purchase. On the contrary, at GBP275 the book is reassuringly expensive, as one would expect of a quality product. However, it is very much worth its price tag and would represent a sound investment for any professional seriously involved in IHT planning and application. Practical familiarity with earlier well-thumbed editions of this book, as well as a thorough road-testing of this current release, leaves no doubt in my mind that McCutcheon’s continues to be the book of books on IHT for the serious IHT professional advisor.

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Chris Erwood

Chris Erwood TEP is Tax Director at Erwood & Associates Ltd and an Editor of the STEP Journal.

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