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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Seeking technical advice from Trusts & Estates Technical (Trusts)

Introduction

Technical specialists based in Bootle, Edinburgh and Nottingham, who are part of Trusts & Estates Technical, advise on the issues covered by the TSEM. Their subject areas are:

  • UK resident trusts and Income Tax
  • non-resident trusts
  • the settlements legislation
  • deceased estates administration periods
  • beneficial ownership and Income Tax

For a full list of subjects see below.

Trusts specialists in Trusts & Estates Technical do not advise on Capital Gains Tax for UK resident trusts or on Inheritance Tax (IHT). However, IHT specialists in Trusts & Estates Technical do advise on IHT - IHTM01081). Refer any doubt, difficulty or dispute on other taxation points (for example trade profits, property income or chargeable gains) to the relevant specialist office for advice.

Trusts & Estates Technical (Trusts) specialists provide advice to HMRC colleagues and do not usually communicate directly with taxpayers or agents, although they may do so on occasion.

Trusts & Estates Technical (Trusts) subject list and office

Subject TSEM reference Trusts & Estates Technical office
     
Trusts    
Income Tax and trusts   Edinburgh
law of England and Wales trust deeds and questions on the reading of trust deeds   Edinburgh
Scots law trust deeds and questions on the reading of trust deeds   Edinburgh
whether a trust exists/whether a trust is valid (other than in the context of TCGA92/S225)   Edinburgh
interest as an allowable trust management expense TSEM8730  
TSEM8735 Bootle    
  trust management expenses issues not covered by TSEM guidance TSEM8000+ Bootle
  non-resident vulnerable person who is physically disabled TSEM3454 Bootle
  vulnerable beneficiaries - notice of determination TSEM3481 Bootle
  other vulnerable beneficiaries issues not covered by TSEM guidance TSEM3400+ Bootle
  mineral royalties received by trustees TSEM3196 Bootle
  woodlands expenses TSEM8790 Bootle
  potential rectification cases TSEM1902 Edinburgh
  potential Hastings Bass cases TSEM1904 Bootle
  trusts for particular purposes TSEM5000+ Nottingham
  effect of the application of foreign law   Bootle
  residence of trustees TSEM1465 Bootle
  Non-resident trusts    
  non-resident trusts - branch, agency or permanent establishment TSEM1461  
Appendix 1 Bootle    
  non-resident trusts and Capital Gains Tax   Bootle
  extra statutory concession A93   Bootle
  extra statutory concession B18   Bootle
  transfer of assets abroad   Bootle
  Settlements    
  settlements legislation apart from capital sums paid to settlor TSEM4000+ Edinburgh
  settlements legislation capital sums paid to settlor TSEM4400+ Nottingham
  Income Tax repayments to minor children - RM3680 onwards, including cases where a pension is payable to a minor child following the death of a parent   Edinburgh
  Estates    
  estates in administration TSEM7350+ Edinburgh
  in the case of estates, questions about whether the individual(s) occupying a private residence held by personal representatives had a ‘relevant entitlement’ in the whole or any part of the net proceeds of disposal (s225A TCGA 1992)   Edinburgh
  Ownership    
  Income Tax issues arising from the ownership or joint ownership of property - this could include tax on rental income, bank or building society interest, or dividends TSEM9000+ Edinburgh
  bare trusts and declarations   Edinburgh

Informal query or formal submission?

Informal queries

Whatever the subject, if the facts are simple or the issue easily explained, you may make an informal query rather than a formal submission.

In particular, if a nominated deeds officer in Trusts & Estates wants advice on the status of a trust, i.e. whether it is bare, interest in possession, accumulation/discretionary or settlor-interested (TSEM1711, TSEM2160, TSEM1562), there is no need to make a formal submission. The nominated deeds officer should simply submit a copy of the trust deed along with a completed deeds stencil 2 (Edinburgh).

Formal submissions

Whatever the subject, if the facts are extensive and/or the issue is complex you should make a formal submission (word 43KB) - see below for full details

In particular if you want advice on trust issues other than status, such as the operation of trust tax law or general trust law, your query may require a formal submission.

After your initial formal submission, subsequent contacts with Trusts & Estates Technical (Trusts) can be on a less formal basis.

When to refer to a technical specialist

When you have obtained all the relevant facts you should aim to resolve technical problems using HMRC manuals such as the TSEM and other guidance (for example, the tax return guidance notes and help sheets) together with the expertise available in your office. If you remain unable to resolve the problem you can seek advice from a technical specialist.

Refer cases early where an issue has new or unfamiliar features, or it flows from a transaction or transactions that are structured in an unusual way. The specialist will want to be alerted about these cases even if your office believes it knows the correct answer and/or not all facts are known.

Do not refer hypothetical cases.

Preparation

You should confine each request to one subject.

To help the specialist give you the best possible service, please ensure that you prepare your request for advice thoroughly. Keep in mind the possibility that any case on which you seek advice could potentially lead to a tribunal hearing and should be prepared properly from the start.

Please ensure:

  • you get all the relevant facts
  • you have looked at any relevant legislation
  • you have checked that the manuals and other guidance do not provide the answer to your problem
  • you have checked that no one else in your office has the knowledge or experience to help
  • the point of principle, or the tax or NICs at stake, merits further detailed consideration

in a formal submission (word 43KB), you obtain approval as required

How to contact technical specialists

You may seek advice from a technical specialist by:

  • phone
  • email
  • post

Contact details (name and email address) are given on the Specialist PT intranet site, Technical Contacts list. Postal addresses are given at TSEM1421.

A phone query will sometimes be the best means of seeking advice. For instance, your query may be urgent, or it may involve an issue that is easily explained. A phone call may be used for an informal query. A phone call is not a formal submission.

If you have prepared your question thoroughly and taken local advice, the specialist will be happy to discuss it with you. The technical specialist may request sight of documents, or a formal submission (word 43KB) so that the problem can be considered in greater depth.

Contact by email

You may prefer to email the technical specialist, for example if the relevant specialist is not immediately available, or you want them to look at a document, or the issue is complex. You may make an informal query by email. You may also make a formal submission (word 43KB) by email, but you must ensure that you follow the guidance below, and attach all relevant documents. If you do not provide all relevant documents by email, the technical specialist will ask you to submit your file, which will add to the response time. To avoid this, you should phone the technical specialist first to discuss what documents he or she will need to see.

Documents: if a relevant document is not in electronic form, you should have it scanned and attach it to the email. It is helpful to date and name all documents including pdfs descriptively, for example, ‘990630 Westward trust deed’, particularly if you are attaching more than one.

Contact by post

This is not normally necessary. Using email is faster and more secure, and more convenient for the technical specialist. But if there is a large volume of material, post may be preferable. You may make a formal submission (word 43KB) by post.

Documents: number relevant correspondence if there are more than a few items, and use flags if referring to items in your submission.

Data security: send only what you need to make your submission. In most cases you will not need to send the whole file. In particular, if your initial submission included the file, you should not submit it in subsequent submissions unless the technical specialist asks to see it again. Subsequent submissions should be by email, attaching any new correspondence in electronic or scanned form. Send any hard copy submission in an orange polylope via TNT to the full postal address - including postcode - of the receiving office (see TSEM1421) and contact the recipient to confirm that the papers have arrived safely

Formal submission

If the facts are extensive and/or the issue is complex, you should make a formal submission to the relevant specialist. You should use the template (word 43KB) provided to make a formal submission by email, in Caseflow cases, or post. Refer to the template notes below, before you start.

You should ensure that the submission is approved by your manager or the appropriate person in your office.

Caseflow

Complete the formal submission (word 43KB) template and attach it to the Caseflow record.

Send an email with the Caseflow reference number to the group mailbox - Mailbox, Trusts Technical (Specialist PT) - to alert the technical team to the fact that a Caseflow case has been referred to them for advice. Insert in the email subject-line the subject-matter of the referral: trusts/settlements/estates/ownership and the Caseflow ID (CFS-**)

If the referral relates to a non-resident trust or the application of the transfer of assets abroad legislation, then the email should be sent to Stuart Atherton (‘cc’ Ian Keenan) of the Trusts & Estates - Non-resident Trusts and Transfer of Assets Abroad technical team in Bootle.

The technical specialist will access the submission and any other documents through the Caseflow record. In due course the specialist will:

  • attach their advice to the Caseflow record
  • email you to let you know it’s there
  • tell you the total time spent on the case to the nearest 15 minutes and their grade.

Keeping taxpayers informed

Our service standard says that we will inform customers if we are unable to provide a complete reply within a target turnaround time. Where it is necessary for you to seek advice you should send an acknowledgement. Do not tell taxpayers or their agents that you have referred the matter to a specialist unless you have confirmed with the specialist that you can. If you need to do more than send an acknowledgement, tell them that you are asking for your manager’s advice. There are two reasons for not disclosing that you are seeking advice:

First, it undermines the standing of your office - in the future agents and customers may be less likely to accept your view without specialist confirmation. Please remember that specialists provide guidance in confidence for you to use in resolving the issues arising in, and circumstances of, the case concerned. You should refer to the specialist again only if there is a genuine need for further advice, obtaining approval in the same way as for the original referral.

Second, there may be difficulties of which you are unaware relevant to the point at issue - such difficulties can affect case handling and practical solutions can become more difficult once an agent knows that a specialist is involved.

Template notes

4. Timing

Decide whether the request is routine or urgent, and state either

‘This request is routine’

or

‘This request is urgent because….’, and specify why, for example it is a complaint case. If there is an important date imminent, state that.

5. Issue

This should be a brief summary - one or two sentences only. It should identify any general and/or tax law issue and the potential tax consequence/s. Examples:

‘whether a receipt by trustees of mineral royalties is capital or income in trust law and consequently whether it is chargeable to income tax on the trustees or alternatively on the life tenant’

‘whether a trust exists of real property such that A and B are equally entitled to the rental income and consequently taxable on the income in equal amounts’.

‘whether or not the terms of the deceased’s will create a testamentary trust over the residue of the estate’.

6. Facts

Set out a numbered list of purely factual material, not including inferences or arguments, and one fact per number. If the case goes to the tribunal, we should be able to put every entry on the list to the appellant in our list of facts ‘not in dispute’. Include what actually happened (events involving the taxpayer) and what HMRC did, for example ‘Local Compliance opened an enquiry on 1 June 2012’. Set out details in numbered paragraphs as follows: 6.1, 6.2, 6.3 etc.

Please relate the facts to specific documents if attached. If making the submission in hard copy, please use flags to identify relevant documents.

7. Assessments and appeals open/Section 9A enquiries made/Revenue amendments made

This information can help ensure HMRC does not miss deadlines and avoids having to issue ‘discovery’ assessments (See TSEM2120).

Set out details for all relevant years separately, in numbered paragraphs as follows: 7.1, 7.2, 7.3 etc.

8. List of appropriate legislation and manuals consulted

Start off with the relevant legislation, for example ITA 2007/S479.

List any guidance manuals you have referred to, specifying the relevant section/s, for example TSEM4125.

List any other sources you have referred to, for example case law not already mentioned, or Revenue & Customs Brief XXX

Set out details in numbered paragraphs as follows: 8.1, 8.2, 8.3 etc.

9. Inferences of fact and argument

Set out the taxpayer’s arguments and HMRC’s arguments in turn, based on the relevant legislation and facts in the case. End with your view of what you think the technical answer may be: conclusion. Set out details in numbered paragraphs as follows: 9.1, 9.2, 9.3 etc.

10. Tax at stake

Explain the tax that would be due for all relevant years

10.1 on the taxpayer’s basis

10.2 on HMRC’s basis

10.3 the tax at stake - the difference between 10.2 and 10.1

11. Wider implications

Use this section to set out anything that might have wider implications than this case. State whether there are other similar cases under enquiry, and if so, what the total tax at stake is. Even if there is not much tax at stake in this case, is there a point of principle at issue? Is the case sensitive? Have you considered the Litigation & Settlement Strategy? Are you aware of any relevant submissions to other technical specialists or Solicitor’s Office? Do you think this is a new form of avoidance? If there is an existing avoidance scheme please give the Scheme Registration Number.

12. Approval

Before submitting the request, you should obtain approval from your manager or the appropriate person in your office. Ask them to approve the submission by adding:

12.1 their name and role

12.2 their view if any on the technical issue

12.3 the date.