The TRS online form asks for the date the trust was created and notes that this is the date the trust deed was signed. The HMRC manual guidance TRSM32020 states that the date the trust was created is the date that assets were first settled into trust, which is in line with s48A IHTA and will be the start date when determining the 10 year anniversary for the periodic charge.
Where the trust document is a wealth managers standard document signed in advance of money advanced and invested slightly later in a capital investment bond as a Loan Trust arrangement, is the date the assets are settled the later date and that date is the date of creation of the trust to enter in the TRS online?
A trust deed can be executed by all parties but unless it has a trust fund at the date it is executed (so not ÂŁ1 or ÂŁ10 even) it is not completely constituted and not enforceable until some property is conveyed to the trustees to be held by them on the trusts of the trust document. In my view the later date is when the trust is created and commences for s48A.
TRSM32020: " Trustees of all trusts registering on TRS must provide the following information on the trust:
The date the trust was created
This is the date that assets were first settled into trust. For trusts created by will, this is the date of death of the settlor."
1 It is not true that all trusts must state the date the trust was “set up”. This only applies to taxable relevant trusts. The requirement is located in Reg 45(2) and (5) and is nowhere to be found in Reg 45ZA for non-taxable trusts. Reg 45ZA(3) says that information already provided under Reg45 does not need to be provided again. It does not say that such information must be provided as well. So HMRC have no authority for seeking this information for a non-taxable trust because they have not got their drafting right.
2 Assets are first settled into a will trust when the administration period comes to an end as regards the destined trust property. This is not convenient for IHT to start the 10 years running so S83 IHTA 1984 says “Property which becomes comprised in a settlement in pursuance of a will or intestacy shall for the purposes of this Chapter [RPT trusts] be taken to have become comprised in it on the death of the testator or intestate”. TRS is not “comprised in this Chapter”. Nor is s83 for the avoidance of doubt and merely stating the general law. It is not. “For trusts created by will, this is the date of death of the settlor.” This is not the general law position but, to use a technical term, “tosh”. There must be an interval however infinitesimal between the death and the end of the admin period when a will trust is created, set up, or commences: its duration is how long it takes for the executors to conclude that the destined trust property is not needed for administration and with land to make an assent.
I almost apologise for pointing out these gross iniquities because I realise that nobody cares, certainly not HMRC. As the old graffito slogan on walls used to say"HMRC rule OK". If you don’t like the law, make it up.
I suggest that an acceptable answer to the request under Reg 45(5(b)) to provide the “date on which the trust is set up” would be to provide the date from which the trust is completely constituted which requires both a transfer of property to trustees and the creation of the trust. One without the other is insufficient.
Wrt the loan trust arrangement, normally the trust fund is comprised of a small sum subsequent to which a substantial loan is advanced to the trustees who invest as appropriate (eg capital investment bond). I do not think the date the trust is set up is the date the monies are invested in the bond. Once the initial funds are settled on trust this date is the date the trust is set up (although I note Jack seems to be of a different view).
No, I agree a small initial sum will do the trick. As to when a trust is “set up” (an Oi! Geezer! description) surely a definition of the term is needed unless it means what HMRC say it means. Even created and commencement are sloppy without a definition. The accurate term is “completely constituted” but may not be understood by HMRC without a definition. What an idea!
I think the 54 posts on the TRS thread illustrate just how HMRC’s sloppy approach has created more problems than it has solved. Advice given on the phone and their forum is often suspect which is staggering given that many who call will (understandably) accept what they have been advised/told as it has been given by HMRC and therefore must be gospel (see Skippyp’s post).