It appears that the requirement to register a trust applies not only in relation to income tax and cgt, as with the 41g, but also if there is iht, sdlt or stamp duty reserve tax.
There are many trusts, that mandate income, which own shares but have no income tax or cgt liability. Does this mean such trusts must register once they have bought or sold shares on the stock market? Or does it only apply to SDRT payable on an off market transaction, in relation to which a separate return has to be made and tax paid.
Because Regulation 45(14) refers to the trustees being liable to pay any of those taxes, if the income is mandated to beneficiaries with an interest in possession, the trustees will not be liable to pay income tax. So the trustees need only register once they have to pay one of the other taxes. The regulations refer to when the trustees are ‘liable to pay’, If the tax is CGT for 2016/17 gains, is the relevant date when the trustees are liable to pay that tax 31 January 2018? Or does their liability accrue when the gain arises, although this would become difficult to interpret if there are many disposals.
I think the regulations must be intended to mean the trustees are “liable to pay” in the year that the income/gains arise - although I agree that the drafting is unclear. This would mean that a trust making a gain in 2019/20 would have to register by 31 January 2017.
Am I alone in thinking there are some words missing from 45(3)? Perhaps “the later of”.
I still don’t understand whether a trust which receives its first income in March 2018 is expected to register (with the aid of time travel) by 31 January 2018.
I would have thought that “liable to pay” [ Reg 45(14) For the purposes of this regulation, a taxable relevant trust is a relevant trust in any year in which its trustees are liable to pay any of the following taxes in the United Kingdom in relation to assets or income of the trust—] refers to the tax year in which income and/or CGT etc arises (creating a liability on the part of the trustees) not the tax year when the actual tax payments in respect thereof are due; otherwise, presumably, the wording would have made explicit reference to the tax year of payment or the tax year in which payment was due.
However, it does seem strange Reg 45(14) includes the word “pay”.
Reg 45(3) provides: “The information required under paragraph (2) must be provided on or before—
(a) 31st January 2018;
(b) 31st January after the tax year in which the trustees were first liable to pay any of the taxes referred to in paragraph (14) (“UK taxes”)”.
I don’t think any words are missing although I take the point.
Para (a) applies where for the tax year 2016/17 the trustees have a liability to one or more of the various taxes; trustees having no such liability fall under para (b).
It may be significant that regulation 45(14) refers to the year, not the tax year. That might suggest that we should look at when the tax is payable. Only income tax and capital gains tax arise by reference to tax years.
As for regulation 45(3), I too feel there are missing words. Without something like ‘whichever is the later’, information must be provided by the trustees of all taxable relevant trusts by 31 January 2018. For example, if the only tax payable by trustees to date is SDLT in July 2017, the trust is ‘taxable’ in 2017. So the trustees must either register by 31 January 2018 because (a) applies or a year later because (b) applies.