I don’t think that Form 41G had any statutory basis. The relevant obligation is to give notice of liability under section 7 Taxes Management Act 1970 and subsection (3) states in terms that a notice is not required to be given if there is no income or gains for the year in question, or the income received falls within specific categories. As far as I can tell form 41G was administrative only, enabling a file to be opened, a reference number obtained etc.
Whether a return was needed on the ten-year anniversary turns on whether the trust fell within reg 4(3) of the IHT Excepted Settlements Regs 2008- the ‘80% of the NRB’ test. On the facts given, I imagine it does. I have never known a penalty to be sought for failure to file an IHT return where no tax was actually due, although I think it is possible.
Tim Gibbons