Is Osborne hitting tax avoiders or simply embarrassing Miliband?

The Chancellor's Budget announced a review of Deeds of Variation – is tax avoidance his motive or does he simply want to embarrass the opposition?

Deeds of Variation became front page news recently when it was revealed that Ed Miliband and his family varied his late father's will with a Deed of Variation. This is a useful tool to help families correct mistakes, to rearrange their affairs if someone dies without a will, to make efficient use of personal, business and agricultural allowances or to give more to charity.  Where a will has not been reviewed for a long time, family circumstances may have changed significantly.

Parliament introduced this flexibility many years ago and HMRC have been aware of the use of Deeds of Variation ever since. Safeguards are in place to prevent their misuse for tax avoidance purposes.  If a Deed of Variation alters the amount of tax that is payable then HMRC must be notified.  In addition HMRC routinely ask key questions to ascertain whether or not the deed has been entered into as part of a deal agreed by family members to avoid tax.

It is arguable, therefore, that safeguards are already in place to catch those deliberately seeking to avoid tax and that the legislation does not need reviewing as it fulfils its purpose.

If the existing legislation covering Deeds of Variation is fit for purpose and HMRC's tax avoidance safeguards are in place then is George Osborne's announcement of a review of Deeds of Variation simply a way to embarrass the leader of the opposition in the run up to the General Election? Does he really want to force families to go through the Courts rather than make these changes themselves?

Whatever the outcome of the review, taxpayers and their families are in a far better position if they have well drafted, up to date wills. They can be fully flexible and tax efficient which should avoid the need for a Deed of Variation altogether.