HMRC TRS Guidance

Looking at the TRS guidance published last week I am confused regarding the need (or not) to identify members of a beneficiary class in section H. In the example at the top of p19 it states “under the TRS the grandchildren, unless named, should be identified as a class” whereas midway on p20 it states “Where the beneficiaries of a trust are not named, but there is simply a class of beneficiary, then a description of the class of beneficiaries should be recorded on the TRS. If however someone from the class of beneficiary can be identified by name then his or her details needs to be recorded.“

Where there is say a class of children & grandchildren and there are living children but no grandchildren as yet should the children be named individually on the TRS or is the class description sufficient? The extracts above would seem to suggest both answers?

Mark Benson
Capital & Professional Consulting Ltd

I believe HMRC have previously indicated that members of a class only need be identified when either:

(a) they are expressly named in the trust (or, probably/possibly, LoW); or
(b) they receive a benefit.

I think the sentences you quote can be made to fit if you treat “identified by name” as bearing the meaning above .

BUT I agree there is a complete contradiction in the context of the actual examples. In the p.19 example with living grandchildren, it says “the grandchildren, unless named, should be identified as a class.” [which is fine]. In the p.20 example with none it says “When a child or grandchild is born then at that point in time he or she should be named on the TRS”.[Contradicts p.19 and earlier guidance].

I wonder if each page was written by a different person? I can’t see how these two examples can be compatible.

I believe the correct HMRC answer to your own example, based on earlier guidance, should be that the children are only named when they receive a benefit but the guidance definitely appears to both support and contradict this.

HMRC still appear to be in a state of confusion over the word “identified” when applying it to different situations. The concept of “key employees” later on page 20 was wholly invented by HMRC. The way charitable trusts are lumped in with EBTs in relation to numbers of beneficiaries and “key employees” is just bizarre.

Andrew Goodman
Osborne Clarke LLP

The examples are written from different perspectives, probably even by different writers . HMRC’s officers are attempting to impose concepts accepted as imposed by outside supra-regulatory bodies without taking the inherent advantage of their ability and indeed their obligation to define these by reference to the trust vocabulary and concepts. I stress that other administrations in Europe are not being as extensive. Attempting to portray themselves as David Cameron did, as leading the march against evasion and redefining our laws in the process by reference to foreign and alien received conceptualisation is neither coherent nor orderly.

In that context, one cannot hope for legal certainty as understood from the English or British domestic perspective, unless HMRC are prepared to protect the trust concepts by protectively restrictive and advantageous implementation. There is no pro-active implementation, just reactivity, here.

There has been no positive input and implementing definition by the hand upon the wheel, leaving the crew to set the sails according to windshifts.

I cite the French implementation of the Beneficial ownership directive as an example of protecting their own structures. there is no fiduciary ownership concept involved. It is all controlling voting rights, not beneficial ownership. In any case where there is no civil individual or company falling within the definition, it is the legal representative of the Company in question who is considered the beneficial owner. Were we to follow the French example, we would be saying the trustee is the beneficial owner in the absence of a fixed or non discretionary interest, or benefit - as the trustee is the legal owner that is not far wrong

HMRC are attempting to be precise, and in so doing are not taking advantage of their duty and their capacity to constrain matters. They are attempting to impose the new form of deemed fiscal ownership on indigenous legal matters which are not dealt with by any positivist definition, leaving a large gap between the fiscal deeming provisions and the very property laws for which they are fiscally responsible.

Advantage meaning rendering the framework efficient and effective but no more than what is strictly necessary to implement the international understanding, or lack of it.

Have the French administration done anything about quasi-usufruits over movable portfolios? No, the nus-propriétaires escape CRS notification.

Peter Harris

Regulation 45(2) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations says that if sub-paragraph (d) applies, ‘information in relation to each of the individuals referred to in regulation 44(2)(b) and (5)(b)’ [i.e. their names, NINOs, etc] does not have to be provided. Sub-paragraph 45(2)(d) applies ‘where the beneficial owners include a class of beneficiaries, not all of whom have been determined’.In such a case the regulations only require a description of the class of beneficiaries. HMRC suggest that they are applying the Regulations, but seem to be requiring more information than trustees are obliged to provide.

Ray Magill