Sometimes dealing with taxation is akin to being back at school. Apart from the constantly changing legislation (new rules to learn), homework (Tax Returns) to be done, and HMRC acting like the strict schoolmaster who marks your work and punishes anyone who disobeys, we now have a new Register (of attendance) to deal with.
The new Register of Trusts and Estates will affect most trusts and all complex estates as it catches any trust “with a tax consequence in the year”, be that Income Tax, Capital Gains Tax, Inheritance Tax or SDLT. That will include, therefore, any Trust or Estate that is required to file a 2017 Trust or Estate Tax Return. To expand further on that explanation, a complex Estate is a period of administration of a deceased’s affairs that is not being processed by HMRC under the informal rules (broadly one with a tax liability of less than £10,000 during the period of administration and one that does not sell assets of more than £250,000). The Trusts that are expected to have to register exclude Bare Trusts and Life Interest Trusts (where all of the income is mandated direct to the beneficiary). The Register does, however, affect most other Trusts whether new or existing. In addition, any Trust or complex Estate that has already come to an end at any stage from 6 April 2016 onwards – even if they have already submitted their final Tax Return and have had it agreed by HMRC – must also register as per the strict reading of the HMRC instructions. If those weren’t enough, the new Register can also affect some Flat Management Companies (other than Limited Companies) as well.
Now that teacher has laid down the new classroom rules, sit up straight and this is how it is done.
To Register a Trust or complex Estate, you need to visit HM Revenue & Customs by clicking here and follow the on-screen instructions. If you have not used the online services before you will need to create a record first which may take a few days for passwords etc. to be created but once in you will be asked a series of questions to identify the settlor (for Trusts) or deceased (for Estates), the trustees or executors, and the beneficiaries including their tax references and National Insurance numbers. In addition, you will be required to provide details of the initial value of the Trust/Estate, and some details of other individuals connected with it. You can stop and make saves to the data as you go along rather than tackle it all in one go like some HMRC systems, although it will only save for 28 days before deleting.
HMRC have “requested” this information by 31 January 2018 or for completely new Estates and Trusts created in 2016/17, by 5 December 2017.
Accountants and other agents will be able to do the registration for you but it may be time consuming depending on the quantum of information needed in relation to the individual trust.
The need for a Trust Register is the result of EU Legislation, specifically the requirement to comply with the Fourth Money Laundering Directive – this is one thing we cannot blame HMRC for. It is, though, galling to know that much of the information that will need to be keyed into the trust register, costing time and expense, is already known to HMRC. However they are unable to export it from one system to the other.
So there we have it. For those of you with a Trust or complex Estate, that’s your homework for tonight. And no television until it is done, either!
If you would like to discuss this matter further please contact Danny Clifford.