Apparently HMRC’s view of para 7 (1) Sch 3A of the Regs is that a non-taxable Will trust is registrable after the 2 years expire whether the administration period (AP) is still in operation and, presumably, whether or not probate or LOA has been granted. I can’t confirm this as HMRC ignore my letters. Tax legislation, which this is not, despite HMRC’s role, invariably caters for these eventualities e.g s682 ITTOIA 2005.
My view is that a Will trust is a juridical nothing (incompletely constituted) until the estate assets destined to comprise the trust fund are vested in the trustees. This cannot happen until residue has been ascertained as regards those assets. The AP begins on the date of death but it cannot end earlier than the date of grant and in all practical terms not even immediately then. Until it does the trust is “in fieri” or inchoate or pending. The potential trust beneficiaries have an equity to have the estate duly administered but not (yet) to enforce the trust itself.
My view that such a trust is not registrable at all until the AP ends and certainly not before a grant is not universally popular. So I ask this: do the trustees of such a trust who take a grant more than 2 years after death commit an offence?
I totally agree with you, Jack, that the two year rule laid down by HMRC should not apply to non taxable Will trusts, unless a trust has commenced, and it is unpardonable that HMRC has not responded to the point raised by you? There must be many cases in existence where deaths have occurred, and several years have passed before beneficiaries of Wills realised or were informed that they needed to obtain a grant of representation.
There is always the defence in Reg 76(4) of “all” reasonable steps and “all” due diligence. Does that mean that there is no defence if 10 reasonable steps were taken but 2 equally reasonable steps were omitted? “All” is surely draftperson’s periphrastic verbal diarrhea. And don’t forget that under Reg 86 contravention of a “relevant requirement” is, subject to the same imprecise defence, a criminal offence punishable by a fine or imprisonment. Such a requirement includes those in Regs 43 to 45G: paras 9 and 9A Sch 6. TRSM is silent on that feature. No mention of TRS here of course HMRC's criminal investigation policy - GOV.UK
What in Reg 76 is a penalty “of such amount as it considers appropriate”? Well we have TRSM80020. The Regs make no reference to “deliberate behaviour” and HMRC seem to be trying to read across the tax penalty regime with its hierarchy of careless, deliberate, concealed. The reasonable excuse tax jurisprudence may be of some relevance. Is it conceivable that that anyone involved in Julian Cohen’s 17 year delay could receive a penalty, fine or a spell in chokey?
There is an appeal and review system as regards penalties but relying on anything stated in TRSM about HMRC’s likely attitude may only be justiciable by JR, which like the Ritz Hotel, is open to all. Perhaps in comparison the King’s dispensing power and the Star Chamber have been somewhat wrongly vilified historically.
