Reporting New Trusts

(Peter Harris, Barrister, Overseas Chambers ) #41

Replying to Julian’s non invitation to speculate. There may be a need if not room for interpretation on the basis of the status of the Regulation and its stated aims.

I believe that the coded answer is that HMRC are asking merely the specific question which their international obligations require them to, they are going no further.

From the international perspective, HMRC may not want to imply in their dealings with say the Parisian OECD on CRS, that any unspecified member of a generally defined beneficial class is in fact a beneficiary entitled to receive income or may be construed as being one.

In other words, HMRC are acutely aware of the danger of provoking overwrought deeming provisions over English law in this context. They do not have the power or for that matter the constitutional jurisdiction to override the law of the land, as it has been so aptly described in the Supreme Court. There is a constitutional limit beyond which tax cannot mould the law.

In other terms, if there is or has been no exercise of a discretion to pay income out to them, then the member of the class might not be considered a beneficiary from the point of view of the Regulation.

Let us not forget the whole of the Regulation hangs off the notion of tax liability, not of the law. May I suggest that this technical opening be considered and once considered, taken, as it is one of the few which the professions will be allowed.

Peter Harris

(Julian Cohen) #42

I don’t think a beneficiary can be considered not to be a beneficiary just because there has not (yet) been any exercise of a discretion to pay income out to him, if he is in fact an object of the trust. Therefore it is in the interests of both trustee and beneficiary that he should appear within the registered trust.

I believe that we can describe an entire class (eg grandchildren of John Smith) and put them in, and that would mean we wouldn’t have to particularise individual beneficiaries within that class, and that may be the real solution of this problem.

Julian Cohen, Solicitor

(Peter Harris, Barrister, Overseas Chambers ) #43

I was really addressing the position cited above by Carlton, and other classes of a more general nature:

Peter Harris

(Peter Harris, Barrister, Overseas Chambers ) #44

Thank you Julian, as your perceived, that latter scenario was really the one I was addressing.
I was not seeking to exempt specifically named discretionary beneficiaries who were within the ambit of a present duty of consideration in any distribution, .
The stricter the application of the terms of the question, the less unnecessary collateral damage there will be.

Peter Harris

(Raymond Magill) #45

The Regulations are clear, if there is a class of beneficiaries which hasn’t closed, no beneficiaries need be named. I think that HMRC now accept this.

Ray Magill

(Lucy Orrow) #46

Where there are more than 10 identifiable beneficiaries, the system allows you to put a class and then I (think) you can write in separately as it would take too long to file out each form. This is also relevant for employee trusts for example.

Lucy Orrow
Lambert Chapman LLP

(Jason Laity) #47

I have seen commentary to the effect that trustees must provide details of “relevant persons” to HMRC but I cannot see this clearly in the regulations - in 45 (2)(b)/© where reference is made to “individuals” and “entities” in 44 (2)(b) should that be taken to extend to not only the beneficial owners but the relevant persons themselves?

Jason Laity

(Julian Cohen) #48

If it’s clear that one can put in “grandchildren of John Smith” (and this I think is so), then we don’t have to put in any details, do we, even if they have received a benefit? No need for National Insurance numbers or dates of birth.

Julian Cohen, Solicitor

(Raymond Magill) #49

It seems clear that HMRC’s Tax Registration Service is flawed. It doesn’t always comply with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations - SI.2017/692. The design of the questions betrays a lack of understanding of trusts, in places. The advice given in ‘help sheets’ and the replies to questions in the two webinars have not been entirely accurate. I’m sure that it will be improved, however. We shall have to wait.

I suggest trustees should be more immediately concerned with their responsibilities under Regulation 44(1). Given that the regulations are effective from 26 June 2017, trustees should already ‘maintain accurate and up-to-date records in writing of all beneficial owners of the trust, and of any potential beneficiaries referred to in paragraph (5)(b), containing the information required by regulations 45(2)(b) to (d) and 5(f) and (g).’ It is worth noting that the definition of ‘beneficial owner’ in regulation 6 says that, ‘where the individuals (or some of the individuals) benefiting from the trust have not been determined, the class of persons in whose main interest the trust is set up, or operates.’

This last wording is clearly relevant when considering employee trusts or flat management companies in particular, as well as discretionary trusts generally. As to the flat management companies, as all the lessees are the settlors, the regulations do not contain any provision applicable to multiple settlors that is similar to that for beneficiaries in regulation 45(2)(d). This is one area where the regulations need revision.

Ray Magill


No, it is definitely not a will trust. Technically the, most legally correct answer would be - a trust established during settlor’s lifetime - as the DoV was not set up BY or even mentioned in the discretionary Trust Deed (that predated the DoV). Maybe the source of the settled funds could be referred to elsewhere in the Registration process.

Hugh Fordham


What about the situation where no beneficiary distributions have been made per se (capital or income), the names of potential beneficiaries are not known or identifiable (eg remoter issue not yet born) but an interest free (repayable) loan has been made to a beneficiary. Has a benefit crystallised? Should that beneficiary in receipt of the loan be named in the registration process with NI nunber etc?

Hugh Fordham

(Andrew M Mortimer) #52

Communication just received from HMRC granting a time limit extension.

Trusts Registration Service registration deadline for new trusts extended
5:20pm, 8 November 2017 First published.
The deadline for new trusts to register is now 5 January 2018.

Andrew M Mortimer

(Lucy Orrow) #53

I’m pleased they have extended the deadline for new trusts, but it doesn’t help with the deadline for existing trusts - i wouldn’t be surprised if this is extended once we get closer to 31 Jan.

Lucy Orrow
Universal Wealth Preservation