Latest HMRC Trusts and Estates newsletter

HMRC has published the December 2016 Trusts and Estates newsletter. This issue contains seven articles:


  1. Civil penalties
  2. Finance Bill 2016
  3. Trusts register
  4. Excepted estates: sales of property during administration period
  5. Errors relating to trusts: rectification, mistake and Hastings-Bass
  6. IHT Online
  7. Requesting details of a deceased’s personal tax affairs


Civil penalties

Changes to ramp up the penalty regime for offshore non-compliance, introduced by Finance Act 2015, will now start to affect trusts and estates work. Where any inheritance tax (IHT) chargeable event occurs on or after 1 April 2016, any inaccurate return involving an omitted offshore asset or offshore transfer is within this regime. Additionally, there is now an ‘offshore asset move’ penalty for moving hidden offshore assets from one territory to another in order to evade discovery by HMRC.


Finance Bill 2016

HMRC answers some queries about the abolition of dividend tax credits and the new rates of income tax on dividends, which applied from 6 April 2017. The queries are about dividends received in estates before or after the date of change, and the effect on trustees of discretionary trusts.


Trusts register

In 2017 HMRC is going to introduce an online Trusts Register which will provide a single point of access for trustees and their agents to register trusts and update their records. This will replace the current paper 41G form and the ad hoc process for trustees to notify changes in circumstances.


Excepted estates: sales of property during administration period

HMRC deals with various questions about excepted estates and the sale of properties some time after the date of death, where the sale price achieved is higher than the figure reported to HMRC in the IHT205 form. The article considers both IHT and CGT issues.


Errors relating to trusts: rectification, mistake and Hastings-Bass

HMRC provides guidance for agents on how to contact HMRC where a taxpayer is considering seeking a trust law remedy in a court of equity. The remedy sought may be rectification of the deed, correction of a mistake, or overturning the trustees’ actions under the principle in Hastings-Bass. In all cases, the parties may ask HMRC if it wants to be joined in the proceedings. It seems that letters on these matters are not always reaching the right place in HMRC. Agents are asked to use the addresses which HMRC sets out in this article and to specify whether their claim falls under rectification, mistake or Hasting- Bass.


IHT Online

The private beta trial of the first stages of IHT Online, a digital service to help those needing to apply for a grant of probate, is almost complete. When launched the service will initially be available to personal applicants applying as executors, where there is no IHT to pay and they are applying for a grant of probate in England or Wales. The service will be expanded to deal with more complex cases.


HMRC is working on updating the existing IHT400 suite of forms to accommodate the Residence Nil Rate Band from April 2017. This will continue to be a paper based process initially while work continues on expanding the IHT Online service.


Requesting details of a deceased’s personal tax affairs

HMRC Trusts and Estates is an increasing number of requests for the final income tax position of a deceased, but is not in a position to provide this information.