VATREG12800 - Entity to be registered: trusts and pension funds: VAT treatment of trustee activities

A trust is an obligation, not a person. However, if the trustees make taxable supplies using trust assets, it is the trustees, collectively, who are the taxable person. The essence of a trust is the separation of legal and beneficial ownership and this separation is reflected in the VAT treatment of trustees.

To prevent a conflict of responsibilities, any activities which persons perform on their own behalf will normally be treated separately from those which they carry on as trustees. Such persons will have dual, or multiple, personality for VAT purposes and each trust will need a separate registration.

Separate treatment of trustee activities will most commonly involve:

  • professional trustees (for example, banks and solicitors) who, separately from their normal business activities, also act as trustees for many independent trusts
  • a person already in business who becomes a trustee with responsibility for the estate of a deceased person
  • pension funds set up under irrevocable trust (these are dealt with in more detail in the section on pension funds), or
  • charitable trusts.

Whether or not trustees are making taxable supplies using the trust assets is a matter of fact and law. It is worth noting that some trustees may have no responsibility other than to hold the trust assets (these are called custodian or bare trustees or nominees) and that it may be the person who manages those assets who is actually making the taxable supplies.

Even where trustees simply act as custodians they remain a separate entity for VAT purposes and are potentially capable of making and receiving taxable supplies.