HMRC’ s guidance on the use of IHT 100 and supplementary forms, states that you use it “to tell HMRC about chargeable events when Inheritance Tax is payable on a trust or gift”
I am currently tasked with dealing with three separate discretionary trusts. Two of these are to be brought to an end before their first 10 year anniversary. One contains just agricultural land and the other a dwelling house occupied by a beneficiary with the agreement of the trustees and as authorised by the trust deed. The value of the properties at entry to the trusts was well below the current NRB. These two trusts have already been registered under TRS and have URNs as they were nontaxable. Will I need to now register these and obtain UTRs even though no IHT will be payable. Admittedly in respect of the land case, a CGT liability may arise but the intention is that any gain will be held over and in the case of the dwelling, the trustees will be claiming PPR exemption so that overall neither trust will end up paying tax. Presumably I only register these when the trusts are brought to an end.
In the case of the third trust, the only asset is a dwelling occupied by the settor who was a beneficiary and which was set up in 2001. She has now died. The current value of the dwelling is well below the NRB so no IHT. As PPR will also be available for this, no CGT as it is going to be appointed to her son the only other beneficiary. This case has not been Registered for TRS yet but it will be done shortly. An IHT 100 Will be submitted on the termination of the trust so as in the case of the first two trusts mentioned, I presume this will need to be registered to obtain a UTR once it is brought to an end.
I guess the answer for all three trusts is that they will need to be registered on the basis that they would be taxable even though no tax will be payable.
The advice I have received is that there has to be a ‘liability’ to pay tax for the trust to register as a taxable trust. If there is no tax to pay then it’s not a taxable trust for TRS purposes.
Regarding Nigel’s comment HMRC’s “Register as a trustee” published on 19 May 2020 provides:
" You must register your trust with HMRC:
to make sure you and the trust comply with anti-money laundering regulations
if you need to get a Unique Taxpayer Reference (UTR) — for example, for filling in a Self Assessment tax return for the trust, even if the trust is on the exemption list
…
If the trust has a tax liability but this is covered by a relief, you’ll need to register the trust to claim the relief through Self Assessment.
It would seem that a trust will have to register as taxable even if it has an IHT liability at the nil rate and does not have to deliver an account by virtue of the Excepted Settlements Regulations 2008 SI 2008/606.
This is an interesting thread because if you read the extended 2020 HRMC guidance unlike the initial guidance which focused on the taxable nature of the Trust, now suggests that all express trusts, unless they are specifically excluded are registrable. Not being liable to tax is not a condition which excludes an express trust from registering (too long to repeat here but is under the revised guidance). So if the starting point is an express trust and it does not fall within the excluded list, then a strict reading of HMRC guidance makes it registrable regardless of whether it was due to pay tax or not. If a Trust was in existence at 6 October 2020 and fell as registrable under the extended guidelines then HMRC state it needs registering with the closure as a subsequent event.
I can see that there are other notes above pointing out the need to register re the PPR claim but outside of this, I can’t see anything in the information given which would make it not registrable. Am I missing something?