Equitable charge and ten year charge

I can see a lot of posts about equitable charges and NRB queries, but I have come across a DT which should have had a 10 year charge review in 2016. Trustees were advised that there was nothing to report. Original charge was for £280k. I can only assume therefore that the solicitor at the time didn’t report because below £325k? It is however, above the reporting limits.
Clauses in deed include RPI increase etc so now we are calculating the exit charge, the ten year charge is important.

Thank you

Lucy Orrow CTA TEP
Lambert Chapman LLP

Yes the IHT 100 should’ve been submitted at the 10th anniversary as they charge exceeded 80% of the nil rate band. I would suggest that it is submitted now and hope that HMRC does not levy a penalty, which I would think should be the case as no tax was payable.
To avoid a charge on exit, it may be worthwhile considering, (if the Will allows it) waiving the RPI charge, thus keeping the value transferred to £280k.
Patrick Moroney
BWL solicitors

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A chargeable 10 year event without tax payable needs to be reported. Sadly this is far from being a rare event and sorting it out is invariably a pain with a wallet dimension, though any penalty is small.

Jack Harper

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I recently completed a matter where TYA was not reported and there was in fact a TYA charge. The Trustees / clients had not been properly advised when setting up the Discretionary Trust i.e. of the reporting obligations. This seems to be a common scenario sadly.

We filed TYA IHT100 and paid tax late - no penalty was levied by HMRC, though of course interest added. This case was only a delay of approx 6 months.

Philippa Jayne Bavington
Giles Wilson LLP

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