STEP Israel Annual Conference hosts Moshe Asher

Meir LinzenMoshe Asher, Director General, Israel Tax Authority (ITA) told the recent STEP Israel Annual Conference, how the ITA reached out to tax payers in Israel, encouraging them to come forward and regulate their tax affairs.

Last year the ITA sent more than 100,000 letters to those suspected of evading taxes. Mr Asher said, ‘In Israel there is no obligation to file an annual report, however, at the same time, regarding people that have income but have not reported it, including income from real estate and rental related to it, we have continued our campaign with sending 5,000 additional letters to people who are being asked to report their undeclared income.’

A new initiative was to go into schools to educate the next generation on the importance of paying taxes. ‘We explain to them how tax is collected, and what do we do with the money. We are pleased to learn that the young generation does not oppose paying taxes and understands its importance.’

Mr Asher used the conference to announce the extension of the deadline for voluntary disclosure of undeclared funds in overseas bank accounts until the end of the year. The voluntary disclosure programme, which started last September, has prompted 5,000 applications to the ITA. While most were submitted anonymously, applicants’ names are to be disclosed when the tax arrangements are concluded.

Held from June 15-16 in Tel Aviv, the eighth STEP Israel Annual Conference attracted more than 250 delegates, including lawyers, accountants, trust professionals, bankers and managers of family offices.

The conference continued its tradition of hosting the top officials from the ITA. Many of this year’s attendees, many of whom came from overseas including the UK, Switzerland, Germany, France, Unites States and Canada, were eager to listen to Mr Asher’s presentation.

This year’s topics included cross border succession, exchange of information, recent legislation of AML, lawyers’ compliance regulations and cross- border taxation between Israel, the UK, the USA and Canada.

The conference was organized and moderated by the STEP Israel committee, consisting of Meir Linzen TEP, Chairman; Daniel Paserman, Secretary and Alon Kaplan TEP, President of STEP Israel.


Meir Linzen TEP is Chairman of STEP Israel

Brexit: Focus must be on cross-border families

passport control

The UK’s historic vote on 23 June to leave the European Union has caused huge uncertainty, particularly for the three million EU citizens currently living in the UK, and the two million or so British people who live in other EU countries.

Brexit has huge implications for cross-border families, both in the UK and in Europe, but the practical consequences are not yet clear. Many families are worried about their futures: will they be able to stay? Will they need a visa to visit their families? Will they need work permits? What about reciprocal public healthcare arrangements? Will there be restrictions on studying and doing business? Will they face higher taxes on foreign property ownership, and cash transfers between member states? How will foreign pensions be treated?

It is essential that these families’ interests are central to the negotiations that will take place over the coming months and years. Their position will need very careful consideration and STEP will take an active role in highlighting their concerns to help provide certainty and enable these families to plan for their futures.


George Hodgson is Interim Chief Executive of STEP

French trust register goes live to public on 30 June

George HodgsonFrance has taken the unprecedented decision to put its register of trusts online and freely accessible this week.

From 30 June the French trusts register can be accessed by using a number of search criteria, including the name of the trust, or identity of the trustee, settlor or beneficiaries.

France obtained this information as trustees of trusts which have a French connection, eg resident settlor, beneficiary and/or holding French assets, have been required to file reports with the French tax authorities since 1 January 2012. Failure to comply is punishable by a fine of at least EUR20,000, or 12.5 per cent of trust assets, if higher.

STEP is highly critical of the move, noting that the data was supplied for tax purposes in good faith, and with no permission for it to be made public.

There is no protection offered for details of vulnerable beneficiaries, such as children, elderly people, or those with limited mental capacity.

This information is strongly biased towards non-French structures, which are being treated on a different basis to French structures.

In addition, there has been no attempt to ensure that the information remains relevant or up to date; nor is there any facility to remove data that is no longer correct.


George Hodgson is Interim Chief Executive of STEP

HMRC’s timescales for dealing with IHT

Jan WrightAs its June 2015 Newsletter declares, HMRC aims to issue an IHT421 probate summary in ten working days from receipt of an IHT400 Inheritance Tax Account.

However this does depend on the inheritance tax being paid first. If it has not been credited to the HMRC account, your IHT400 goes into a different, and slower-moving, pile of correspondence. This can mean delay, and you may need to chase.

Where you have various financial institutions paying the tax, I’d suggest you get confirmation from all of them that all tax has been paid before submitting the IHT400.

This allows you to keep in control of the process and assists HMRC in keeping to its deadline.


Jan Wright TEP is a Director at Harrison Drury, Lancashire, and a member of STEP’s UK Practice Committee

What’s happening to dormant assets?

Post Office Savings Book

The UK government has recently formed the Independent Commission on Dormant Assets which is investigating a revised scheme in order to identify new pools of dormant or unclaimed assets.

The existing scheme was formed in 2008, after the Dormant Bank and Building Society Accounts Act 2008 was passed, which deems bank and building society accounts to be dormant after a lack of customer-initiated contact for 15 years. The intention of HMRC is to locate these abandoned assets and use them to benefit good causes.

The commission is pooling its resources from various finance and industry experts and intends to report its final analysis to the prime minster and the cabinet office by the end of 2016. It will analyse the following:

  1. Which dormant assets can be brought into an expanded dormant asset scheme, and how they can be identified by industry
  2. The projected size of the funding pot this could produce for good causes
  3. Whether with the potential increase of dormant assets being released by industry the current system is able to manage the burden; and
  4. Whether any new legislation should include a requirement for improved transparency from industry on disclosing the level of assets within their sector.

The government estimates indicate there could be more than GBP1 billion of untapped sources of dormant assets which may include stocks, shares, bonds and pensions. Since the Dormant Assets Scheme was initiated in 2008, approximately GBP750 million has been released from banks and building societies and most of the recipients have been charities across the UK.

The new scheme is intended to provide further momentum to pass the dormant funds onto those who really need them in the charity sector. Rob Wilson, the Minister for Civil Society states, ‘More than a billion pounds of assets, that might otherwise sit gathering dust, will go into funding for charities that make a real difference to people’s lives across the country. To build an even more caring and compassionate country we need to transform dormant resources and give the funds to those who need it.’

It is easy to understand how these assets are overlooked in the first instance, considering how common it is for people to manage their assets digitally (see below). Family members may be completely unaware of the existence of bank accounts or stocks or shares, let alone having access to the data and passwords.

Other possible scenarios might be moving home and not redirecting the post, changing names after marriage, mergers between banks and building societies or a general lack of paperwork. These accounts may be unintentionally abandoned for 15 years and later released to an obliging local charity, to the detriment of the unknowing beneficiaries.

However, there are common scenarios which do not give rise to dormant assets such as intestate estates. The rules of intestacy are activated when someone dies without making a will and they determine which surviving relatives will inherit the estate. In the event that there are no surviving relatives, after investigation, then the estate automatically passes to the Crown and will not be subject to the dormant asset rules.

In the event of a testate estate, and a missing beneficiary, the process becomes more arduous due to the fact that personal representatives and trustees (in the case of trusts) have clear fiduciary responsibilities to carry out the deceased’s wishes for their estate or trust. They are under a duty to protect the interest of the beneficiaries. Therefore, if adequate measures have been taken to locate a beneficiary unsuccessfully, it is deemed reasonable to assume they have died, and distribute the funds to other beneficiaries in accordance with the will.

The personal representative or trustee may seek an indemnity from the other beneficiaries to cover the funds, should the missing beneficiaries reappear. Alternatively they may seek a similar indemnity from an insurance company. Where significant funds are involved they may instead seek a ‘Benjamin Order’ from the court, allowing the trustees to assume that the missing beneficiary is dead. In any event, the funds will be distributed, rather than being held awaiting any contact from the missing person. Therefore, the assets will not linger, or be overlooked, and the estate can be promptly wound up, unless they have passed completely under the radar in the first instance.

  • STEP has recently set up a Digital Assets Working Group to address the emerging issues for practitioners in this field. Its purpose is to educate members and providing guidance and resources; and to campaign for greater clarity and uniformity in international laws and the T&Cs of internet service providers.


Emily Deane TEP is Technical Counsel at STEP

How does FRS102 affect the preparation of trust and estate accounts?

Jonathan CookeThe answer, in two words: ‘it doesn’t’!

The new Financial Reporting Standard FRS102 is applicable in the UK and Republic of Ireland and replaces all the UK Financial Reporting Standards and UITF Abstracts in issue prior to the new UK financial reporting regime.

It sets the standard for financial reporting and applies primarily to corporate entities whose financial statements are intended to give a true and fair view of their financial position and profit or loss for a period. It has no relevance to the accounts that practitioners prepare for private family trusts and estates.

In the event that a trust owned a trading business then separate accounts would be prepared for that, conforming as necessary to FRS102, but the trust accounts themselves would merely reflect the trustees’ share of any trading profit derived from the business.

The accounts for any private company whose shares are owned by the trustees would similarly be dealt with as a separate matter.

So it is business as usual for trust and estate practitioners who can continue to be guided by the standards set out in the STEP Accounting Guidelines (Guidelines for the Preparation of Trust & Estate Accounts in England & Wales), particularly as far as English and Welsh trusts and estates are concerned.

The STEP Accounting Guidelines are subject to periodic review. In particular, the examples of how tax returns can be prepared from the information contained in the specimen accounts will be reviewed in due course, once the form of the 2016/17 trust tax return is known following the 2016 Budget changes to income tax and dividend tax rates.


Jonathan Cooke TEP is the author of the STEP Accounting Guidelines. He was one of the founding members of STEP and is a consultant in the Trusts & Estates Support Services department of Humphrey & Co, Chartered Accountants, Sussex, UK