Further to our recent posts on the trust registration service (TRS), the Tax Faculty has received more information from HMRC on which trusts need to register and exactly what needs to be entered on the TRS. HMRC has also provided an updated set of FAQs.
Which trusts need to register
HMRC has clarified a number of points about which trusts need to register:
New FAQs from HMRC
HMRC guidance on the TRS was published on 9 October 2017 in the form of FAQ, This has now been updated and draft HMRC guidance was published on 22 November. This is not yet on gov.uk but the pdf is at the end of this news item.
There have been a few additions to the guidance, in particular:
Class of beneficiary
One of the controversial aspects of the TRS and an area where advisers were concerned about their ability to obtain all the information required in the timescale is the requirement to enter details of beneficiaries. The concerns centred on broad classes of beneficiaries where HMRC was saying that if the beneficiary could be identified their details should be entered. This applied even if they had not received a benefit. In many cases the beneficiary would not even know they were a beneficiary, so to obtain details from them could at best prove tricky and at worst cause confidentiality issues.
HMRC has had a rethink and listened to stakeholder feedback and has revised its position:
In addition, potential beneficiaries, those who only become beneficiaries on a certain contingency, for example the death of a named beneficiary, can be part of a class without being named until the contingent event occurs.
The new FAQ gives two examples on pages 19-20 to illustrate this change of view.
We are still concerned about the January 2018 registration deadlines.
It is now less than six weeks to the 5 January 2018 deadline for registering new trusts and complex estates and just over nine weeks to the 31 January deadline for all existing trusts with a tax liability in 2016/17. But this period includes the Christmas break, likely to be a week and a half for most staff, so the time available is really more like four weeks and eight weeks.
The 5 January deadline is looking more do-able but the 31 January deadline is more of a stretch and it is likely that many agents will fail to meet the deadline once Christmas holidays and the self assessment filing requirement are factored in. We are in ongoing discussions with HMRC about this and other outstanding TRS issues.
The updated HMRC FAQs are below:
I have been told by HMRC Trusts, that if a trust ceased prior to 10th August 2017, no registration is required, but for Estates, the cut off date is 26th June 2017, but there is apparently no way to confirm this.....
I have a discretionary trust which was wound-up/ceased/terminated on 30 June 2017 at which date all assets ( freehold holiday letting property + F&F+Cash )were distributed to beneficiaries - there will be no Income Tax or Capital Gains Tax liabilities for 2017/18 ( or indeed earlier years ) as a result of available losses and Hold Over reliefs- however there was an IHT Exit Charge ( returned on IHT 100 ) - in view of the 10 August 2017 date mentioned by Vanda Williams will this trust need to be registered - on the basis that it ceased to exist prior to that date.