HMRC have continued to make concessions on the new Trust & Estates Register, in response to the concerns raised by professional bodies (in which two of our Private Wealth team have played an active part), most recently on 22 December and in early December. While many issues remain, this has brought some relief for advisers.
The deadline for trusts that have already been registered with HMRC, where there is a continuing tax liability arising on the trust and thus need to register, is now in practice 5 March 2018. While it remains formally 31 January 2018, HMRC have confirmed they will not impose a penalty if the trust is registered by 5 March, although any tax liability for 2016/17 still needs to be paid by 31 January.
This revised timetable also applies to “complex estates” that need to be registered, which is any estate with a value over £2.5 million, or where the value of assets (home, shares etc.) that have been sold in any one year exceeds £500,000 (deaths from 6 April 2016, prior to that the limit was £250K) or any estate with a tax liability for the administration period exceeding £10,000.
HMRC have confirmed these changes in their latest Trust & Estates Newsletter issued on 22 December, the last working day before Christmas! That includes some useful tips on “workarounds” such as inputting dummy dates of birth, postcodes and dates of death in certain circumstances. It also confirms the revised timetable.
“When can a beneficiary be determined?” is also a question addressed by the Newsletter. A crucial question in considering the details that must be shown on the register, HMRC have relaxed their interpretation of the regulations here, previously being more demanding than the law required. This helps situations where a class of beneficiaries, such as “grandchildren” are potential beneficiaries but none are named specifically. Such beneficiaries only need to be shown on the register if they receive any benefit from the trust –which is sensible and logical.
Where a potential beneficiary is only intended to benefit in the event of the death of another beneficiary, or if some other contingency happens, then that beneficiary does not need to be shown until that death or other event happens. The class of potential beneficiaries can be shown, saving the need to supply lots of details of those who will not be getting any benefit for the foreseeable future.
Some questions remain on the issue of those whose details should be shown. If anyone has any queries on this, we can advise on the detail, particularly if there is any person the client would not want to be contacted for personal details, notifying them of the existence of the trust. Some potential benefits are best kept under wraps for the time being!
For new trusts and complex estates, HMRC have acknowledged this month that where a new UTR has been issued for a new matter, the taxpayer does have three months from the issue of the UTR in which to submit the tax return. This means, for example, that a new trust which needs to register for income tax or CGT in 2016/17 and only obtains a UTR in January, will formally have until April to submit the return, even though the deadline was only extended to 5 January. Tax liabilities must still be paid by 31 January.
Published: 18 January 2018
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