TRS - previously dormant trust now taxable

Trusts Discussion
1

I don’t believe this specific issue has been raised on this forum before, so am posting this in case it is of help or interest to others.

I posted the following question on the HMRC Community Forum for agents two months ago:

We have a trust which was issued with a UTR before the introduction of the TRS, but which has been dormant for self-assessment purposes for some years.
It was registered as non-taxable on the TRS and issued with a URN. We now have to submit a tax return to report some chargeable event gains.
Should we update the trust to taxable on the TRS, or just leave the TRS as it is and submit the tax returns to HMRC using the existing UTR?

I have now received the following response from HMRC:

You will need to register the Trust as taxable and the contact the Trusts helpline Trusts to close the duplicate UTR.

You will need to confirm the existing UTR so this record can be reopened.

My original plan had been to leave the TRS unchanged and simply report the gains using the existing UTR, so I wish I hadn’t asked…

Diana Smart
Gordons LLP

2

I assume that the gains are in 2023/24 and that the settlor died before 6/4/23.

The trustees have two distinct and unrelated obligations.

  1. To notify HMRC that they are chargeable to IT in 2023/24. They must do this in the ‘notification period’ which commences on 6/4/24 and ends on 5/10/24. (s 7 TMA). (Write a letter asking for the UTR to be ‘reactivated’.)
  2. To supply to HMRC qua maintainer of the register of certain trusts the additional data required by Reg 45. They must do this within 90 days of becoming liable to the income tax due. In my view they become liable to pay the tax on 31/1/25. (Supply the data via the TRS.)

HMRC seem to want to treat the updating of the TRS as fulfilment of the trustees’ s 7 obligation. But I can’t see how this can be done without either late notification of the chargeability to tax or early updating of the TRS. The former can lead to penalties.

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