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This publication is available at https://www.gov.uk/government/publications/hm-revenue-and-customs-trusts-and-estates-newsletters/hmrc-trusts-and-estates-newsletter-december-2018
1. Agent toolkits
Tax agents and advisers play an important role in helping their clients to get their tax returns correct. As a specialised tax area, many agents do not complete a large number of Trust and Estate returns.
You may find the following toolkits helpful:
The HMRC trusts and estates toolkit helps and supports tax agents and advisers for whom trusts and estates are not a significant element of their practice’s work. Other agents may still find the toolkit helpful in validating their approach to this work and anyone, including businesses, trustees, and personal representatives may find the toolkit useful if they are completing a Trusts and Estate Tax Return.
The HMRC Capital Gains Tax (CGT) for trusts and estates toolkit helps and supports tax agents and advisers by providing guidance on the errors we find commonly occur in relation to CGT for trusts and estates and supplements the main toolkit for trusts and estates. Use this toolkit if you need to complete form SA905 trust and estate capital gains supplementary pages. If there has been a chargeable gain in the period the return covers, or you are not sure whether CGT applies, use both toolkits.
We also have an Inheritance Tax (IHT) toolkit to assist you with completing IHT Account form IHT400. The toolkit may also be helpful when completing the excepted estate forms IHT205 or C5 (for Scotland) as many of the considerations, such as valuation, also apply to these.
2. Trusts Registration Service
The Trusts Registration Service (TRS) has been available for lead trustees and their agents since July and October 2017, respectively. It enables trustees and their agents to register trusts and complex estates online.
Trusts require a Unique Taxpayer Reference (UTR) in order to submit their SA tax return. There are different deadlines for registration depending on whether or not the trust already has a UTR.
If the trust already has a UTR and is submitting an SA tax return for 2017/18, but is not yet registered on TRS, then the deadline for registering is 31 January 2019.
Any trust requiring a new UTR in order to submit a 2017/18 SA tax return should have registered on TRS by 5 October 2018 in order to give enough time to issue the UTR. If you have not done so, register immediately.
2.1 Updating TRS
HMRC is implementing TRS in a number of phases. Currently, it is not possible for lead trustees and their agents to update their registered information or to declare that there have not been any changes. We have apologised in previous newsletters for the delay in providing this functionality.
The project to allow trustees and agents to update their details online is now underway. Following user feedback, we are switching to a new system (a ‘micro service’) which will be more intuitive, easier to navigate and have several advantages over the current ‘iForm’ service. We intend to roll out the new service at the start of the summer of 2019 and functionality will be expanded gradually in a series of deployments, which will include the ability to update details.
In the meantime, if you need to inform HMRC that the lead trustee or trust correspondence address has changed then write to us at:
HM Revenue and Customs
There is a specific question, question number 20 on the SA900 trust tax return asking if the TRS has been updated. For now, submit completed SA900 forms without answering Question 20 and leave the tick box blank. You will not be penalised for not answering Question 20. Our apologies for any confusion this may cause.
2.2 Volunteers wanted
As part of our commitment to continuously improving Trusts and Estates services, we are holding multiple research sessions with agents to understand their requirements.
We would like to hear from agents interested in participating in the following research:
- experiences of Trusts and Estates online registrations, focusing on common issues
- prototype testing of potential changes to features and design of the service
If you are interested in taking part in any of the above sessions or you have any questions, email firstname.lastname@example.org.
2.3 The Fifth Anti-Money Laundering Directive (5MLD)
TRS was created following the adoption of the Fourth Anti-Money Laundering Directive (4MLD) and required any express trusts that paid tax to register. 5MLD will expand the register to all express trusts regardless of whether they pay tax. HM Treasury will publish a consultation this winter asking for views on how the UK interprets and implements this requirement. Look out for this and send them your response.
3. Taxation of Trusts Consultation
The Chancellor of the Exchequer announced in his Autumn Budget 2017 that the government would publish a consultation in 2018 on the taxation of trusts.
The consultation document is now available and invites views on the principles that government believes should underpin the taxation of trusts: transparency, fairness and simplicity. It provides examples of areas where government believes these may not be fully met and seeks views and evidence on the case for and against reform to these and other areas.
The closing date for comments is 30 January 2019.
4. Inheritance Tax Manual - Speciality Debts
Following consultation with stakeholders, HMRC has published updated guidance on the IHT treatment of specialty debts. The revised sections of the IHT Manual can be found at IHTM27079, IHTM27080 and IHTM27104.
The position will also apply for the remittance basis.
The significance of the location of a specialty debt for Capital Gains or withholding tax on interest purposes is governed by statute. HMRC’s guidance on CGT and interest source is set out respectively at CG12400P and SAIM9090.
5. IHT - Application for Confirmation in Scotland
Earlier this year minor amendments were made to Form C1, used to apply for Confirmation in Scotland.
HMRC were informed by the Scottish Courts and Tribunals Service (SCTS) of their intention to accept only the latest version of this form. Sheriff Clerks in Scotland were instructed by SCTS to only accept the latest C1 form, at the time version 03/17, from 7 June 2018. However, subsequent to that date, a further version of Form C1 was issued by HMRC.
The latest version of the form can always be found on GOV.UK. The current reference number, which can be found on the bottom right of the form, is 06/18. It has been agreed with the SCTS that the 03/17 version of the form will continue to be accepted, but customers should move to using the latest version as soon as possible. Versions of the form pre-03/17, which reference the Scottish Court Service and not the SCTS, will no longer be accepted by Sheriff Clerks in Scotland.
Customers using third party supplier software should continue to do so, as third party suppliers have been made aware of this change and updated versions of their forms will be accepted.
6. IHT Reference for a Taxpaying Lifetime Event
If you have not already got a reference and need to pay IHT on:
- a transfer into a trust
- a ten year anniversary on a trust
- assets that have stopped being held in a trust or being relevant property
You must apply for a reference, using form IHT122, before you send us your account. You’ll need to do this for each separate event.
Applying for a reference will mean we can match your payment to your account when we receive it. If you do not get a reference first it may take time for us to trace your payment and match it to your account.
You should only use a form IHT122 when you need a reference for one of the lifetime events we’ve listed above. If you are sending us a form IHT400 and tax is due, you should apply for a reference online or use form IHT422 – Application for an Inheritance Tax reference.
7. Correspondence Scanning issues - avoiding delays
All paper correspondence is scanned onto our systems by colleagues in our scanning centre. This helps us to locate and deal with your post more efficiently. However, we do regularly receive items that cannot be scanned and original items that we need to return. It may take us longer to deal with your form IHT400 or letter if you include one of these items. To avoid delays do not send us:
- cheques - we prefer you to pay electronically because it’s quicker and safer, but if you do pay by cheque send it separately to:
HM Revenue and Customs
Cheque Banking Team
CAT 1, Room B1-25/26
St Mungo’s Rd
- documents and valuations with any sort of binding, send us an unbound copy
- original documents of any sort, including building society passbooks, unless we’ve specifically asked to see these
- oversized documents, larger than standard A4 size - we understand this will not always be possible, but if you can send us an A4 copy do so
- it will also help us to deal with your form IHT400 more quickly if you can:
- send us double-sided copies
- place any IHT405 forms and valuations of houses, buildings and land at the very back of the documents you’re enclosing