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Where Taxpayers and Advisers Meet

New trustee - notify HMRC?

cliffordpope
Posts:84
Joined:Thu Jun 24, 2010 8:45 am
New trustee - notify HMRC?

Postby cliffordpope » Tue May 16, 2017 10:27 am

I am one of two trustees of a small family discretionary trust. We have the power to appoint additional trustees, and have done so in the past, but I have forgotten the procedure. I'm pretty certain that a simple resolution recorded in the minutes is sufficient, but do I need to notify HMRC?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: New trustee - notify HMRC?

Postby maths » Tue May 16, 2017 7:48 pm

The terms of the trust will dictate how trustees are to be appointed failing which the legislative framework will apply (TA 1925 s36 et al).

Normally appointments are made by deed although appointments in writing may suffice (note TA 1925 s40).

Regarding HMRC see:

https://www.gov.uk/government/publicati ... april-2017

cliffordpope
Posts:84
Joined:Thu Jun 24, 2010 8:45 am

Re: New trustee - notify HMRC?

Postby cliffordpope » Wed May 17, 2017 10:47 am

So a new online registration system starts in June 2017, but "only complex estates will need to be registered".
I image that a NRB trust holding only investments is not complex?

I'm still unclear as to whether under the present system appointment of a new trustee needs to be notified or not, and if so, how?
And if only complex estates need to be registered after June 2017, can I take it that if this is not a complex estate, no action is necessary regarding HMRC?

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: New trustee - notify HMRC?

Postby AGoodman » Tue May 23, 2017 12:40 pm

I'm afraid that the HMRC definition of complex estates effectively includes any estate which establishes a will trust if the will trust incurs a UK tax liability (e.g. income/capital gains/SDRT/SDLT) during the relevant tax year. It also includes any other express trust. It is all contained in the draft Money Laundering Regulations 2017, which are likely to come into force in July/August.

(the formal term is "relevant taxable trust").

I would expect a NRB Trust holding investments to be caught. The online portal does not yet exist, in part because the election has delayed the regulations.

The obligation is to register by the end of the tax year (ie by 5/4/18) and then update or confirm each year there are tax liabilities.

Note that the regulations also require significant record keeping by the trustees (who need not be professionals) - see Reg 43 here:

https://www.gov.uk/government/uploads/s ... _FINAL.pdf

cliffordpope
Posts:84
Joined:Thu Jun 24, 2010 8:45 am

Re: New trustee - notify HMRC?

Postby cliffordpope » Wed May 24, 2017 6:23 pm

The HMRC link describes the impending process for registering a new trust, but what is the procedure for an existing trust?

Supposing we appointed an additional trustee today, should we notify HMRC of that appointment, and if so, how?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: New trustee - notify HMRC?

Postby maths » Wed May 24, 2017 8:23 pm

There is currently no requirement to notify HMRC of the appointment of a new trustee.

Indeed Form 41G(Trust) has no formal standing, merely a convenient way to provide relevant information to HMRC.

The statutory responsibility for trustees is set down in TMA 1970 s7(1) ie requirement to notify HMRC of any chargeability to income tax or CGT within 6 months of the end of the tax year followed by any requisite filing of a Return.

cliffordpope
Posts:84
Joined:Thu Jun 24, 2010 8:45 am

Re: New trustee - notify HMRC?

Postby cliffordpope » Thu May 25, 2017 6:57 am

Thank you both very much.

Lee Young
Posts:2707
Joined:Wed Aug 06, 2008 3:26 pm
Contact:

Re: New trustee - notify HMRC?

Postby Lee Young » Mon May 29, 2017 5:31 pm

I think there might be some confusion about the new HMRC trust register, undoubtedly because it probably wont be ready on time and also because we are already in a hiatus where we need to advise clients about it but have no idea (really) what it is.

What it definitely is not is the mechanism to change trustees. It might well be a new burden on trustees to record a change of trustee (which until last tax year used to be done on the SA900) that has already happened, but that change of trustee will still need to be done in line with the settlement's requirements - usually by a deed.
Lee Young
Solicitor, Chartered Tax Adviser and Trust and Estate Practitioner


Partner, Frettens LLP
lyoung@frettens.co.uk
01202 491701

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: New trustee - notify HMRC?

Postby AGoodman » Tue May 30, 2017 4:48 pm

As Lee states, the new register is not itself a method of changing trustees, just an added administrative burden.

As an aside, the draft regulations require changes to be updated to the register by the end of the relevant tax year - so do not change your trustees (or let a beneficiary die) on 4 April or you will likely be in breach of the rules. I am sure that the apparently unlimited civil penalty will be operated fairly with a Solomon-like wisdom.


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