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Matthew Hutton MA, CTA (fellow), AIIT, TEP, presenter of Monthly Tax Review (MTR), highlights issues arising following the Finance Act 2008 changes to the remittance basis.

The remittance trap: sub-accounts and right of 'set off'

The reason why some are suggesting that another bank is used is, where there is borrowing from the bank concerned, the bank will probably have the right to set off money in all accounts with that bank against the borrowing. That could obviously not be helpful in relation to the nominated account. Other than that I can't see any reason to use a different bank, provided the bank is setting up a genuinely separate account.

There is also the question as to whether sub-accounts work. In my view they do, on the basis that there is clear segregation, but there must be some uncertainty on this issue.

(Trusts Discussion Forum 18.3.09, posting by Nicholas Jacob of Lawrence Graham LLP)

FAQs issued by HMRC on 3 March 2009 (p4)

Q: Do HMRC consider that identifiable separate bank accounts are discrete even when they are set up as sub-accounts under an umbrella agreement?

A: Yes.

(Trusts Discussion Forum 18.3.09, posting by Claire White of Herbert Smith LLP)

Double taxation?

Imagine a non-resident settlor-interested trust; one where the settlor is UK resident but not UK domiciled. The income arising is entirely from offshore sources.

The settlor is a long-term resident and elects to pay £30,000 a year for the remittance basis. He is subject to tax on the trust income under  ITTOIA 2005 s 624 but only to the extent it is remitted to the UK.

In fact all of the income arising in 2008/09 is distributed by transfers in that year to the offshore bank account of the settlor’s wife (who is UK domiciled). She remits this to the UK in 2009/10, at which point the settlor is chargeable.

S685A is intended to exclude a tax charge for the wife for 2008/09 in such circumstances, but only if the income distribution represents income on which the settlor is charged to tax under s619(1) in the current or a previous year. In this case he will not be chargeable until 2009/10.

Is it agreed that, as the settlor would not be charged on the income for 2008/09, s685A would not apply, leaving his wife taxable? Thus the same income is taxed twice - quite apart from the £30,000 ‘levy’ and the settlor’s loss of allowances.

(Trusts Discussion Forum 26.3.09, posting by Ray Magill)

What is MTR?

MTR is a 90 minute monthly training course, held in London, Ipswich and Norwich – as well as a reference work. Each Issue records the most significant tax developments over a wide range of subjects (see below) during the previous month, containing 30 to 40 items. The aim is not necessarily to take the place of the journals, but rather to provide an easily digestible summary of them and, through the six-monthly Indexes, to build up, over the years, a useful reference work. 

The first aim, therefore, of MTR is to inform. The second and subsidiary aim is to provide a monthly forum for the discussion of issues that tend to come up in professional practice, largely, though not exclusively, prompted by specific items in MTR.

Who should come to MTR? Does it attract CPD?

MTR is designed not primarily for the person who spends 100% of his/her time on tax, but rather for the practitioner (whether private client or company/commercial) for whom tax issues form part of his/her practice. Attendance at MTR qualifies for 1.5 CPD hours for members of the Law Society, for 1.5 CPD points for accountants (if MTR is considered relevant to the delegate’s practice) and (subject to the individual’s self-certification) should also count towards training requirements for the CIOT. For STEP purposes, MTR qualifies for CPD in principle, on the grounds that at least 50% of the content is trust and estate related.  
 
What is the content of MTR?

The material is drawn from HMRC press releases, Tax Bulletins, VAT business briefs, case reports and articles in the professional press. Each item carries a reference as to source which can be followed up if necessary. 

The logic of the ordering of the 12 sections is as follows: first, Capital Taxation (viz 1. Capital Gains Tax, 2. Inheritance Tax and 3. Stamp Taxes). Second, Personal Tax (4. Personal Income Tax). Third, Business Related Matters (viz, 5. Business Tax, 6. Employment, 7. National Insurance and 8. VAT & Customs Duties). And fourth, Miscellaneous (viz 9. Compliance, 10. Administration, 11. European and International and 12. Residue). An annual binder is provided within the subscription cost.

Despite an inevitable element of selectivity, MTR aims to be catholic in its coverage – and this is reflected in the presentations where appropriate: there may well be NI, VAT or employment tax points of which the person advising mainly on estate planning (for example) should at least be aware. That said, the London sessions at least tend to focus, by majority request, on estate planning issues: it is possible that in future one of the sessions might be geared more to company/commercial matters. 

How is MTR circulated?

The Notes are emailed to each delegate in the week before the presentations (and thus can easily be circulated around the office), with a follow-up four or five pages of practical Points Arising during the various sessions (whether in London, Ipswich or Norwich).

When and where is MTR held?

The London meetings take place at the National Liberal Club, One Whitehall Place, London SW1, on either the first or second Tuesday of the month, generally in the David Lloyd George Room. There is a choice of four sessions: 9.00 - 10.30 (3 places available), 11.00 – 12.30 (6 places available), 1.00 – 2.30 (8 places available) and 4.00 – 5.30 (3 places available).

The Ipswich meetings take place generally on the first or second Wednesday of the month at the offices of Pretty’s solicitors 45 Elm Street, Ipswich 5.00 – 6.30pm (5 places available). 

The Norwich meetings take place at the Norfolk Club, Upper King Street, Norwich on the first or second Thursday of the month from 5.30 – 7.00pm (3 places available). 

Dates are fixed up to a year in advance and any one delegate from a firm can take up the firm’s place each month. Attendance is limited to no more than 30 delegates in London and 25 delegates in Ipswich and Norwich (to make for ease of round table discussion).  The cost in London is £60 plus VAT, and in Ipswich and Norwich £50 plus VAT (billed every six months in advance).

How do I find out more?

For further details, visit http://www.matthewhutton.co.uk/ on Conferences & Seminars and then Monthly Tax Review – or email Matthew on mhutton@paston.co.uk.

For those whose firms unable to make the monthly seminars but wishing to order MTR as 'Notes Only' (at £180 per annum for the 12 issues, invoiced six-monthly in advance), visit  our sister site, TaxBookShop.com:
Monthly Tax Review Notes