Has anybody looked into the statutory basis for HMRC imposing the TRS on any trust that needs a UTR (in this case, purely to claim an exemption) but is not registrable under the 2017 Regs?
I imagine they could make out an argument under some part of the TMA (in the same way they required completion of a 41G) but it would be very helpful if anybody could point me in the right direction.
Thanks in advance
Andrew Goodman
In my view itâs ultra vires as is registering any estate. This is NOT tax legislation but AML as the vires for the Regs is derived from FSMA 2000.
HMRC 's authority is in CRAC 2005:
s5
(1)The Commissioners shall be responsible forâ
(a)the collection and management of revenue for which the Commissioners of Inland Revenue were responsible before the commencement of this section,
(b)the collection and management of revenue for which the Commissioners of Customs and Excise were responsible before the commencement of this section, and
(c)the payment and management of tax credits for which the Commissioners of Inland Revenue were responsible before the commencement of this section.
(2)The Commissioners shall also have all the other functions which before the commencement of this section vested inâ
(a)the Commissioners of Inland Revenue (or in a Commissioner), or
(b)the Commissioners of Customs and Excise (or in a Commissioner).
(3)This section is subject to section 35.
(4)
In this Act ârevenueâ includes taxes, duties and national insurance contributions
Revenue and AML cannot be construed ejus generis. So IPSE DIXIT yet again and subject to JR, though no one will bother as we are all priced out of redress apart from Uncle Jolyonâs Good Law Project
Jack Harper
Thanks. It does seem to be set up entirely on the basis that if you donât do it, we will make it impossible to do the things you are required to do.
Who knows? Maybe the Good Law Project will want to take a stand for the little guy (in this case a unit trust and fund management businessâŚ)
You donât give the facts of your case. But if the exemption in question is private residence relief, then I suspect you are a victim of current HMRC practice of mistaking their manuals for the law.
The law is clear:
ââŚwhere notice has been given under section 8, 8A or 12AA of this Act, a claim shall not at any time be made otherwise than by being included in a return under that section if it could, at that or any subsequent time, be made by being so included (s42(2) TMA 1970).
This means that a claim can be made outside of a return if it made before HMRC issue the s 8A notice or after the time allowed for making and amending the return has ended.
The problem I have had is this non-sequitur in CG64206
âTrustees or personal representatives
a return is required because private residence relief, whether under the provisions of TCGA92/S225 or TCGA92/S225A, must be claimedâŚâ
HMRC more or less get it right at SACM3030 where the first example of claims that cannot be made within a return is âA claim by someone who is outside SA and does not receive a notice to file a return, nor files a voluntary returnâ.
If the exemption relates to 2023/24 then, sans claim, the tax would be due on 31/1/25 and the trust would need to be registered as taxable relevant trust within 90 days of that date (reg 45(10A)(b)*) far too late to get a UTR for 2023/24.
*of SI 2017/692 Money Laundering, Terrorist Financing and transfer of funds (Information on the payer) Regulations 2017
Trustees have had to make a claim for PRR as regards disposals on or after 10 December 2003 : s225(1)(c) TCGA 1992. This means in the absence of a claim they must notify under s7 TMA !970 if they have not been sent a s8A return notice which will often be the case as many trusts in this position will own the dwelling house as their sole trust asset.
If they notify on time, by October 5 after the end of the tax year of disposal, and a return is not sent, strictly they need to do nothing more: a s29 assessment allows a claim under s43A as long as they have not been careless or deliberate. which seems unarguable if provocative. Or they can file a voluntary return under s12D with its highly dubious entitlement of HMRC in subs (1)(c). Trust Returns can only be made on paper or electronically by an agent.
But this now all interacts with the CGT payment on account rules in FA 2019 Sch 2 and CG-APP18C. If full PRR is due no return need be made and making a claim for this purpose in due course can be assumed, but then it must be made later as stated above . Under the latter guidance at 1.4 âTrusts that become liable for CGT must be registered with the Trust Registration Service (TRS) before creating a CGT on UK Property Accountâ. And âTrustees should use the Organisation Government Gateway user ID and password used to access TRS and the trust Unique Taxpayer Reference (UTR) or Trust Registration Number (TRN) to create their CGT on UK Property Accountâ. So apparently a UTR is not needed if a TRN is held.
It is likely now that a trust will, or should have been, registered already on TRS as a non-taxable trust under Reg 45ZA(5). If it becomes taxable it must re-register as such under Reg 45 (3) (c) and (10A)(b) within 90 days of the trustees becoming liable to pay the CGT where PRR is not available in full. That must mean within 90 days of the date of disposal (not the end of the then current year, still less the following January 31). It is self-evident that, as a disposal must take place during the relevant tax year, HMRC will not yet have issued a s8A notice. A UTR will be provided in response.
The CGT on UK Property Account return (clumsily under the Act called âa return under Schedule 2 to FA 2019â) is not always sufficient so a return may be required in due course. There is no need to file a s7 TMA notice unless the final tax calculation exceeds the notional tax returned: para 18.
HMRC say " However, trustees may choose to file a UK property return if they wish to make a claim for relief, such as private residence relief. A letter detailing the claim can be uploaded as an attachment to the online return or enclosed with the CGT on UK property paper return. If a Trust and Estate tax return is subsequently required, the reference of the CGT on UK property return where the claim was originally submitted can be provided in the âAdditional informationâ box."
The implication is that if this procedure is followed a later s8A notice may not be issued. If this is the trusteesâ only tax liability for the year that is an end to it (save for any enquiry.
Duncanâs comment was âIf the exemption relates to 2023/24 then, sans claim, the tax would be due on 31/1/25 and the trust would need to be registered as taxable relevant trust within 90 days of that date (Reg 45(10A)(b) far too late to get a UTR for 2023/24.â If I am right, the trust with a partial exemption PRR claim, even if the disposal date is 5 April, will have to register on TRS within 90 days and will have to make a FA 2019 return within 60 days (if only by using the TRN) and is probably well-advised to make the PRR claim too, just as HMRC suggest. It seems HMRC encourage the latter even where full PPR will be claimed, so that a FA 2019 return would not actually be obligatory.
Jack Harper
Thanks both.
It was a different exemption that prompted my submission (exemption for offshore collective investment schemes) but we have encountered similar problems with PPR.