Registering an estate with TRS because more than two years have passed since death

Trusts Discussion
1

I would imagine this question has been addressed previsously but i cannot readily find an answer.

A will contains the words “on trust” and so, under HMRC’s definition, becomes registerable with TRS if the admin period extends beyond two years from death. However, the estate does not meet the criteria to be considered a complex estate.

When registering with TRS, it would be wrong to say that the “trust” has no tax liability but will a UTR be automatically be issued and self assessment returns required when they ought not to be?

1 Like
2

Hi Jeremy

Registering the Admin Trust and registering the Estate as complex to obtain a UTR are two separate things. You will see the option when you are in the TRS system. You can put that the Trust has no tax liability: it is the Estate that has the liability (although may not be “complex”).

Sara

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3

Thanks Sara.

That is what my colleagues have been doing but since it seems a semantic nicety to differentiate the “estate” from the “trust” when saying whether there is a tax liability I wondered whether there was any specific guidance from HMRC to support this?

4

I agree with Sara.

We register ‘trust of the estate of’ as a non-taxable trust. This will then run until the estate has been administered and then closed.

This would be separate to registering the ‘estate’ if tax returns are needed and to any resulting trust from the Will.

Lucy Orrow CTA TEP

Lambert Chapman LLP

5

Thanks Lucy

Sounds like there is a consensus but I am still curious as to whether there is specific guidance on this.

6

TRSM23020 - Types of trust that need to be registered: contents: excluded express trusts: contents: estates and trusts created on death - HMRC internal manual - GOV.UK

A trust created by will that holds only property from the estate of the deceased person is excluded from registration as an express trust for a period of two years from the date of death (Sch3A(7) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017).

It may well come down to interpretation of the Will. Many older Wills mention ‘held on trust’ for - which would trigger this requirement, even if not a formal trust.

7

Thanks Lucy

That’s exactly the point.

The “trust” created by the will perhaps because the words “on trust” are used when refering to the residue being held absolutely for beneficiaries, becomes registerable after two years from death. When registering, the question is asked whether the trust has a tax liability. You are saying that you answer no to this question and I wonder on what basis this is the case or if HMRC have specifically stated that this is the correct approach.

8

Of course, I accept the pragmatism behind the decision to register but while the admin period is still on foot as regards the entire estate there is, ex hypothesi, no express trust in existence. TRS is a mechanism for registering express trusts. Even more curious is that this is HMRC’s own published view of the applicable law: TSEM6045.

But what’s an irritating bit of substantive law doing interfering with the important bureaucratic administration of anti-money laundering?

Jack Harper