I attempt to respond to comments made by Andrew and Patrick as best I can although based on earlier posts by others I may be alone in my views. Apologies for the length of the post.
Patrick states “(on the basis that the executors were holding the estate In trust for the beneficiaries even though they may not have been given the estate to hold upon trust)”. I do not believe that this is correct.
On death, a person’s estate (both personal and real) devolves on his PRs. The PRs do not at that time hold the estate property as “trustees” for “beneficiaries” (ie those inheriting under the will during the administration period who only have choses in action) [Livingston v Comm of Stamp Duties PC ].
The 4th and 5th money laundering directives have no application to “estates”.
There are, I believe, two issues to be considered.
There is the deceased’s “estate” and “trusts” arising under the deceased’s will.
Where an estate is treated by HMRC as “complex” then it becomes necessary for the PRs to obtain a UTR number for the estate and SA900 is required to be completed for each tax year of the administration period. The term “complex” relates to self-assessment and not the TRS. Nevertheless, in order to obtain a UTR the estate requires registration under the TRS but such registration is for administrative purposes only (per HMRC “and the information collected on registration reflects that”).
An express trust requires registration whether or not it has a tax liability.
However, certain non-taxable (only) trusts may qualify as “excluded trusts” (ie are excluded from registration); these are listed under Sch 3A MLR 2017; SI 2017/692 (as amended). Para 7 Sch 3A provides for “trusts having effect on death” to be excluded from registration if the trust is holding only the property comprised in a person’s estate on death and less than two years has passed since that person’s death. Thus, registration of the trust will be necessary if two years or more has lapsed from the date of the deceased’s death and the trust is still in existence (ie it has not been wound up).
Based on the above, my responses to Andrew’s post (italics below for ease of reading) above are as follows:
if an estate either has no tax affairs, or it does but it is not “complex” as defined by HMRC then:
- If the will or intestacy contains a trust (e.g. an entitlement due to a minor, a life interest, a discretionary trust) then it must register under the TRS if the estate remains in administration 2 years from the death*
Response: Where the estate has no tax liabilities and the trust (not necessarily the estate) subsists two years after death, registration of the trust is necessary. But where the trust has a tax liability, even if the estate does not qualify as a complex estate, then Sch 3A para 7 is irrelevant and registration of the trust is necessary irrespective of any time period. In addition, the estate must register to obtain a UTR (see above).
if an estate either has no tax affairs, or it does but it is not “complex” as defined by HMRC then if the will or intestacy contains no trust (i.e. all adult beneficiaries absolutely entitled) then the estate never needs to register under the TRS, i.e. whether 2 years have elapsed since the death or not
Response: Where the will does not create any trusts there is by definition no trust which requires registration. However, if the estate has a tax liability and is complex registration of the estate is necessary in order to secure a UTR (see above); otherwise no registration necessary.
It may be that in practice administration of an estate within a two year period may prove difficult. However, as indicated above, exemption from trust registration under Sch 3A para 7 does not depend upon this but whether the trust subsists two years post death. HMRC accept that trustees’ powers may be exercised prior to completion of administration or the assent of property by the PRs and thus termination of the trust within the two year period is possible.
I suspect I may be in a minority of one but would welcome arguments to the contrary.