Update: TRS now open to agents

Simon HodgesUpdate: 19 October

HMRC has asked us to disseminate the following:

‘The new TRS is now available for agents to use. As part of this online process, agents will be taken through the steps to create an Agent Services account before they can register on behalf of trustees.

Agents use the link from www.gov.uk/trusts-taxes/trustees-tax-responsibilities to register a trust. As part of that journey, the agent will be asked to create an Agent Services account, and the agents will be directed to request access to the Trust Registration Service by email. The agent will receive a response from HMRC giving them access to Agent Services and some guidance on what to do next. Once they have created an Agent Services account they will be directed to the Trusts Registration iform.

In registering for an Agent Services Account they will have been identified as seeking to access the TRS, and will not be offered the option of linking existing government gateway IDs and client relationships. This is only undertaken by agents participating in the controlled go live of MTDfB.’

We are aware, however, that there are reports that Agent Services – and, therefore, TRS – will not be fully live for agents until the end of October or the beginning of November, though this may be subject to change. We will update members as and when we get more information. In the meantime, we have reported on the TRS issues in today’s Industry News: UK Online Trust Registration Service now available to agents.

Original blog

HMRC has confirmed that, from last night (17 October), the Trust Registration Service (TRS) is now available to agents filing on behalf of trustees. This follows last week’s announcement, that due to technical errors, there were delays in allowing agents access to the system.

HMRC has also confirmed that there will be no penalty imposed where registration is completed after 5 October 2017 but before 5 December 2017. STEP has inquired with HMRC whether there is any potential flexibility in that deadline, and we will update members on the outcome of those discussions. However, at the time of writing, the deadline of 5 December remains.

HMRC’s statement in full:

‘From today, the Trust Registration Service (TRS) is available to agents filing on behalf of trustees. Please see the following link for further details on how to gain access to the TRS: www.gov.uk/trusts-taxes/trustees-tax-responsibilities.

The new TRS allows agents, acting on behalf of trustees, to register trusts and complex estates online and to provide information on the beneficial owners of those trusts or complex estates. The new service, which was launched in July 2017 for lead trustees, replaces the 41G (Trust) paper form, which was withdrawn at the end of April 2017. This is now the only way that trusts and complex estates can obtain their SA Unique Taxpayer Reference. As part of this online process, agents will be taken through the steps to create an Agent Services account before they can register on behalf of trustees.

In this first year of TRS, to allow sufficient time to complete the registration of a trust or complex estate for SA and provide beneficial ownership information, there will be no penalty imposed where registration is completed after 5 October 2017 but before 5 December 2017.

For both UK and non-UK express trusts which are either already registered for SA or do not require SA registration, but incur a liability to relevant UK taxes, the trustees are required to provide beneficial ownership information about the trust, using the TRS, by 31 January following the end of tax year. This means, if the trustees of a UK or non-UK express trust incurred a liability to any of the relevant UK taxes in tax year 2016-17, in relation to trust income or assets, then the trustees or their agent need to register that trust on TRS by no later than 31 January 2018.

The relevant taxes are:
• income tax
• capital gains tax
• inheritance tax
• stamp duty land tax
• stamp duty reserve tax
• land and buildings transaction tax (Scotland).

The new service will provide a single online service for trusts to comply with their registration obligations. This will improve the processes for the administration of trusts and allow HMRC to collect, hold and retrieve information in a central electronic register.

More information is available in HMRC’s September Trusts & Estates Newsletter.

Finally, on Monday 9 October we published our guidance in the form of an FAQ note to help our customers understand the TRS requirements.’

Simon Hodges is Director of Policy at STEP.

STEP LatAm Conference 2017 in Colombia

CartagenaA sell-out audience of over 370 delegates has been attending the 2017 STEP LatAm Conference in Cartagena, Colombia this week. The fact that they managed to get here in spite of a local transport strike made me feel, as a Brit, rather at home, but it also shows what a strong following the annual STEP Latam Conference now has.

Looking at STEP in the Americas, we now have a network of well over 40 branches with, between them, almost 5,500 members. This makes our major conferences a major meeting place for practitioners across both North and South America.

STEP Colombia is one of our newer STEP branches, but has a group of committed volunteers working hard to establish STEP in the jurisdiction as a way of enhancing professional knowledge and building international links in the fast-developing country. Cartagena was an inspired choice of venue for the event; as a major UN World Heritage site with an immaculately preserved historic centre, it proved highly appealing for delegates from further afield.

The twin issues of the European pressures for public registers of beneficial ownership and the implications of the US’ non-participation in the Common Reporting Standard (CRS) were just two of the key themes explored in the conference, which Patricia Wass TEP, Chair of STEP Worldwide and Luz Alfonso TEP, Conference Chair and one of the founder members of STEP Colombia, jointly opened.

After this year’s enormous success, many are already looking forward to next year’s STEP LatAm Conference in Mexico.

George Hodgson is Chief Executive of STEP

STEP England & Wales Biannual Statement July 2017

Rita BhargavaIt is a pleasure to be writing to you for the first time as Chair of STEP’s England & Wales Regional Committee to let you know about the work we are doing on behalf of members in the region.

We’ve been performing well, with 93% of member renewals for 2017 received and 350 new members in the last six months. We’ve also seen more than 100 enrolments on STEP’s England and Wales Diploma in that time.

From a practice perspective, the recent political turmoil has impacted on our sector in various ways. Two issues of note were the draft legislation on the taxation of non-domiciliaries and offshore trusts and the probate fees debacle – both of which placed enormous strain on practitioners. STEP has been active on both fronts on behalf of members and their clients.

Finance Act 2017
The proposed changes to the UK’s taxation of non-domiciliary rules, which were due to come into force on 6 April 2017, were extremely complex and left a number of areas of uncertainty, which STEP’s UK Technical Committee highlighted to HMRC. The answers received were then collated in a Guidance Note for members’ information. However, the proposed changes were dropped from Finance Bill 2017 (now Finance Act 2017) to enable the bill to get through Parliament ahead of the General Election.

We’ve now heard that the proposed changes will resurface in a new Finance Bill after the Summer Recess, and will be backdated to 6 April 2017. This brings some welcome certainty, but it should not be forgotten that there are further changes on the horizon for non-doms and offshore trusts, which may be brought in later this year or next, so any planning will need to factor these in.

Probate fees
The proposed increase in probate fees announced earlier this year placed a huge strain on both probate registries and practitioners as everyone struggled to be ready for the May deadline. STEP was extremely active on this issue from the outset, expressing concern about the fairness, practicality and legality of the proposed increase, and obtaining a legal opinion from Richard Drabble QC, which stated that an increase in fees on the scale suggested could not be achieved without fresh legislation. You can read an overview of STEP’s activity here.

When the probate fee increase was put aside ahead of the General Election, we all breathed a sigh of relief. But we are not out of the woods yet: rumour has it that this may resurface, and we are keeping a close eye on the situation.

Public awareness
Politics aside, a lot has been happening at STEP in recent months.

It was great to see the launch in May of a new campaign to raise awareness of STEP and TEPs among UK consumers. A key part of this is the launch of www.advisingfamilies.org – a public-facing website providing information on issues relating to the services STEP members provide. It’s backed by a digital campaign – ‘You can talk to a TEP’ – to raise awareness and drive people to the website.

Many members and their firms have got involved, contributing content and engaging with the campaign on social media. If you haven’t yet had a look at the website, I’d recommend you do so. You can read more about the campaign and how to get involved here.

Speaker Register
Work has also been underway to develop a Speaker Register, which branches and central event organisers will be able to use to find speakers for their events. This exciting new development offers members the opportunity to put themselves forward for speaking opportunities. More than 300 members have already registered their interest in speaking via their Online Profile, so if you want to feature on this, make sure you register today.

So – a busy six months; with lots more to come, no doubt, as the year progresses. I look forward to reporting on that in December, but for now I hope you get at least a little respite over the summer to recharge for what’s ahead.

Rita Bhargava TEP
Chair, STEP England & Wales Regional Committee

Happy 25th birthday STEP Jersey!

George HodgsonI had the pleasure of attending STEP Jersey’s AGM and 25th anniversary celebration this week. STEP Jersey is one of our largest branches, with over 1200 members, and is also one of our most active. Not only does it host many well-attended events, but it works closely with government, regulators and others to ensure the jurisdiction maintains its position as a respected international financial centre.

Indeed it is fair to say that STEP Jersey plays an integral and important role in the economic life of the island, with the trust industry one of the largest local employers.

Much of the discussion focused on how to ensure that STEP, both locally and internationally, could maintain the success of its first quarter century well into the next. In conversations over a most enjoyable traditional cream tea (with the welcome, but less traditional, addition of a glass of Prosecco) I was struck by the confident tone of many senior professionals who were present.

They fully acknowledge the challenges that increased transparency and a consequent explosion in compliance costs will bring. Rather as with Brexit in the UK, however, the mood was generally ‘what is done is done – so let’s get on with it.’

I am delighted to see that STEP Jersey is setting up a policy-focused committee to ensure there are effective links with local regulators and others to work through the rapid changes now underway.

The team at STEP Worldwide will continue to give STEP Jersey (and other branches working on these issues) all the support we can in helping develop a coherent and well-informed strategic approach to the trust industry in the new age of transparency.

George Hodgson is Chief Executive of STEP

Embracing a new skills agenda

EPP forumThese days, the world seems to be changing faster than it spins on its axis. While the headlines darken each morning with geo-political and economic tumult, the sense of unease continues reading beyond the front pages. A bleak outlook for the workplace: robots will take over, professions will be rendered obsolete by new technology; a Fourth Industrial Revolution is less than a mouse-click away…

Participants in a global economy, we are available 24:7. How can we thrive in these modern times? Where do we find breathing space? How can organisations find time to develop its staff without taking them from business as usual activities? How can individuals cultivate a work-life balance or reflect on their place in the world?

Such questions were posed by the STEP Employer Partnership Programme’s inaugural Summer Forum last week in London. Hosted by BDO, the evening included high-profile speakers drawn from the trusts and estates industry and the learning and development world to explore these issues. Participants were given a powerful call to action to embrace a new skills agenda and innovate in their practice.

BDO’s Head of Private Client UK, Paul Ayres, opened the programme. Reflecting on the changing role of the tax practitioner, his observations will resonate with contemporaries in the tax world as those in other professional services:

How can your organisation meet changing client requirements? How do you promote yourself in a world that increasingly denigrates the value of professional advice as the internet perpetuates the fallacy that everyone can be an expert? How can you make an agile response to constantly changing governmental and regulatory constraints? How can you keep ahead of legislation, embrace technology, maintain global competitiveness and deliver your services at the right price point? How do you retain your trainees, who are entering the workforce now with very different expectations of work from their supervising partners? How do you give the same quality of training you experienced, when the advent of digitisation has rendered obsolete the opportunities to develop the practical and client-care skills embedded in the training contracts of old?

Leading learning and development specialists Liggy Webb, Jonathan Winter and Jane Hart gave impassioned responses as to how we interpret these challenges. We all wish to be more flexible and confident in the way we approach challenges in life, both at work and at home. Liggy Webb delivered strategies for resilience – emotional sunscreen to help us confront those challenges head on and keep us sane.

Jonathan Winter discussed how careers really work, blowing away the cobwebs on the traditional model of the career trajectory that most have entered the workplace with, debunking myths about how we think about work and leaving us with seven habits crucial to future-proof a career.

Jane Hart, closing the programme, addressed the changing world of work and urged delegates to embrace new technologies, adopt learning tools and strategies that embed a culture of learning within individual, team and organisational outputs. Drawing on examples of pioneering practice from players like Google, she deftly illustrated how this can be done without the onerous burden on budgets human resource training often presents. A lively Q&A offered a stimulating debate on these ideas.

By the close of the evening it was clear that those employers who adopt a proactive approach to change and empower their employees similarly will thrive. Those investing time, as well as financial and intellectual capital into their workforces will reap the land of plenty in the future. Embracing new models of learning and working, and viewing technology as an enabling force, not a threat, will help them withstand the social seismic shifts and lead the new skills agenda for the modern workplace.

Madeleine Jenness, STEP Education Manager

STEP Caribbean Conference, Cayman

George HodgsonI have just enjoyed a highly informative STEP Caribbean Conference in Cayman from May 1-3, which attracted well over 300 delegates from across the STEP world.

Presentations ranged from the emerging theme of cryptocurrencies, which I suspect is a wholly new topic to many in the audience, to the use of firewall provisions in fending off matrimonial claims.

What really stood out, however, is the changing mood across much of the Caribbean regarding transparency and the rising regulatory burden. Yes, these developments are providing major challenges, particularly in driving costs up sharply across the board.

This was a theme very clearly evidenced in STEP’s Offshore Perceptions research report last autumn. But the message from a string of eminent speakers is that the time is gone to complain about this; it’s time instead to ‘get on with it’ and ensure that businesses adapt to the new environment they are now working in.

This obviously echoes the mood in the UK regarding Brexit, where whatever the views of STEP members on the issue, I sense most agree that we need to now accept it is going to happen and plan on that basis. Indeed Brexit and its potential implications for the offshore world was another key issue which attracted a full house.

The Caribbean Conference, which is now in its 19th year, remains one of the flagship STEP events in the calendar and I look forward to next year’s meeting in Barbados.

 

George Hodgson is Chief Executive of STEP

Probate fees: how we got to where we are

Emily Deane TEPFollowing the news late last week that the UK government is scrapping its plans to hike probate fees, Emily Deane TEP looks back on an eventful 15 months for STEP and practitioners.

February 2016
In February 2016 the Ministry of Justice (MoJ) issued a consultation paper on reforms to the fee system for grants of probate. The paper proposed to increase the fees for estates of over GBP50,000, with a banded fee structure depending on the estate value. Larger estates faced a 13,000 per cent rise to GBP20,000.

STEP strongly opposed the new system on the basis that the proposed fee would be completely disproportionate to the service provided by the probate court, and would effectively be a new tax on bereaved families.

We raised concerns on the grounds of fairness, practicality and legality, in particular that the new measures being introduced via the Draft Non-Contentious Probate Fees Order 2017 may be ultra vires, i.e. beyond the power of the order.

The consultation was widely circulated, with over 97% of respondents opposing its proposals. Then the matter went quiet for almost a year.

February 2017
On 24 February 2017, STEP received notice from the MoJ that, subject to parliamentary approval, and despite overwhelming opposition to the proposals, the new fee system would be implemented in May 2017: just weeks away.

Concerned that this would have a huge impact on bereaved families and their legal advisors, we set out to highlight the issue to ministers, the media and the public.

We contacted the MoJ highlighting our concerns and requesting a meeting. We received no reply, with the MoJ remaining extremely quiet on the issue. No clear information was posted highlighting the new fee structure to the public, with a discreet link to the consultation response on the gov.uk website the only notice that these changes were coming.

We therefore sought to raise public awareness of the issue, issuing press releases and explaining our concerns to the media, and developing guidance for members of the public.

Our work paid off, with national media including BBC Moneybox, the Daily Mail  and the Mirror  covering the issue. Our guidance for the public was viewed nearly 2,600 times and our social media channels were buzzing with activity.

April 2017
Then at the beginning of April we heard that the influential House of Commons Joint Committee on Statutory Instruments had questioned the legality of the proposals, given that the new ‘fees’ looked very like taxes. But while hopes were raised, the government continued to push forward with no changes to its plans.

Concerned that the issue would not be given proper scrutiny, STEP obtained a legal opinion from leading expert in public law, Richard Drabble QC, who agreed with the SI Committee’s findings and confirmed that ‘the proposed Order would be outside the powers of the enabling Act’.

Then, on Tuesday 18 April, Prime Minister Theresa May called a snap election. The pressure was suddenly on to get all orders through before parliament was dissolved.

On Wednesday 19 April the House of Commons Second Delegated Legislation Committee rushed though the Non-Contentious Probate Fees Order 2017 meeting at 8.55am, with no advance warning that it would be tabled that day. It was approved 10 to 2.

On Thursday 20 April we finally received a response from the MoJ to our earlier letter, dismissing our concerns and advising that the fee changes would be going ahead.

We understood that the Lords were due to discuss the matter on Monday 24 April, so we immediately sent the legal opinion to senior politicians in the House of Lords to inform the debate.

Later that evening press reports suddenly emerged that the proposals were to be dropped, and the next day we received a bulletin from the MoJ stating: ‘There is not enough time for the Statutory Instrument which would introduce the new fee structure to complete its passage through parliament before it is dissolved ahead of the general election. This is now a matter for the next government.’

Success…for now…

Our effort, and those of practitioners across the country, to highlight the issue had paid off. The legal uncertainty highlighted by Richard Drabble QC, combined with the media attention, meant that it could not be pushed through the Lords in time.

We have since heard from senior sources in the Lords that the subject may re-surface as primary legislation post-election, in which case it would need to be approved by both Houses of Parliament. We presume it would be re-introduced as a new tax, rather than an increased fee. If so, the funds will go to the Treasury, not the MoJ.

STEP will continue to work closely with our members and the media to increase awareness of the matter, although we sincerely hope it will not re-emerge in a different guise.

Emily Deane TEP is STEP Technical Counsel

Probate fees – will common sense prevail?

George HodgsonThe government’s threat to radically increase probate fees next month (Probate fee rise ‘a new tax on bereaved families’) may be receding, following a meeting of the House of Commons Joint Committee on Statutory Instruments on 29 March.

Using some very welcome common sense, the committee raises the issue (para 1.12) that it is a constitutional principle that there should be ‘no taxation without the consent of Parliament’. This is something I suspect 99% of people will agree with.

It finds that the proposal from the Ministry of Justice (MoJ) is clearly a tax, not a fee, in every normal definition of the term, and should therefore be subject to full parliamentary scrutiny, rather than brought in via the back door through a Statutory Instrument.

The committee also finds (para 1.13) that ‘charges’ of the magnitude proposed by the MoJ were probably never envisaged when the original legislation the government was attempting to use here was approved. In other words, using this process is an abuse.

We would hope that this will provide an opportunity for the government to re-think its approach, which was criticised by over 90% of those responding to the consultation, and submit re-worked proposals for proper scrutiny by Parliament.

• Joint Committee on Statutory Instruments: Non-Contentious Probate Fees Order 2017

 

George Hodgson is Chief Executive of STEP

New probate fees: FAQ

UPDATE 21/04/2017: the Ministry of Justice has conceded that the new fee regime has been abandoned due to lack of parliamentary time. See more information.

 

Newcastle District Probate Registry has supplied the following FAQs to help practitioners implement the new probate fees.

Q. What happens in cases where there is a need for an HMRC Assessment will any delay mean I incur the higher fee?

In cases where you are required to submit an IHT 400 or any IHT document for assessment by HMRC for Inheritance tax purposes then it is possible for you to submit the appropriate forms to both HMRC and HMCTS Probate simultaneously. We will not issue your grant until the approved IHT 421 is received but we will mark your application as lodged. To assist us in not raising this as a query it would be advisable to clearly mark your application that the IHT document will follow after assessment.

Q. Do we have the actual date of implementation?

No we do not have the actual date of commencement yet. However we can assure you that on receiving that date a mail shot will be released immediately informing you of that date. HMCTS Probate would however like to work with you now to ensure that we reduce as much as possible the added burden on applications nearer that date. You can assist us in doing this by following the steps in the mail shot sent to you on Monday 6th March.

Q. How do I calculate the estate value that the fee will be charged upon?

The fee is calculated from the net value of the estate after deducting liabilities or debts from the total of assets and gifts – you can do this using the appropriate Inheritance Tax form.

  • On an Inheritance Tax Summary Online application this figure will be the figure noted in the net estate value box
  • On form IHT 205 the net estate value for fees purposes can be found at Box F
  • On form IHT 207 the net estate value for fees purposes can be found at Box H
  • On form IHT 421 the net estate value for fees purposes can be found at Box 5

Q. What is considered as a full application?

A full application for Probate purposes and therefore to qualify for the appropriate fee is defined as the following. It must include:

  • An full oath sworn by all deponents and commissioners
  • An original will and codicil(where appropriate) endorsed by all commissioners and deponents
  • The appropriate number of correct copy wills an codicils
  • An Inland Revenue account (with the exception of IHT 400’s/421’s where assessment is ongoing and it has been noted on the covering letter that it will follow)
  • All associated documents including any affidavit evidence required at the time of submission, renunciations, Powers of attorneys
  • The appropriate fee.

Upon receipt of an application in this form prior to commencement then the existing fee will be charged.

Settlers and Prelodgements are not considered as full applications and therefore submission of an oath for settling prior to commencement and a subsequent oath after commencement will result in the new fee being applied.

Q: When will the new fees be implemented – at date of death or date of application?

The new fees will apply to all applications received by the probate service on or after the implementation date of the new fees irrespective of the date of death. Any application received within working hours of the Probate Registry before the implementation date will be charged the current fee. Subject to approval of the necessary legislation by Parliament, we expect the new fees to take effect from May 2017, but the exact date will be confirmed nearer the time.

Q Is there to be any equivalent of the IHT instalment option for an asset rich / cash poor estates?

There will not be an instalment option available to pay fees. If the estate does not have enough cash to pay the fee, executors will be able to apply to the Probate Service to access a particular asset for the sole purpose of paying the fee.

Q. How does the new fee affect property held between cohabitating couples?

The law remains the same. Any jointly owned assets (e.g. property held as joint tenants) will not require probate, regardless of whether couples are married, in a civil partnership or neither. All couples are free to choose how they hold their property, and they can change to a joint ownership arrangement via the Land Registry.

HMRC: no more safe havens

Treasure chestThis week STEP hosted a seminar to update members on HMRC’s latest moves to tackle tax evasion and avoidance.

Entitled, ‘An essential update on HMRC’s activity to tackle tax evasion and avoidance, including information exchange, new powers and its impact on professional advisors,’ the seminar took place at BDO LLP’s office in London. Speakers included John Shuker from the HMRC International & Offshore Evasion Team, and Dawn Register TEP of BDO LLP.

The introduction of the Common Reporting Standard (CRS) this year follows a raft of governmental efforts including the Foreign Account Tax Compliance Act (FATCA) and the EU Directive 2003/48/EC (the EU Savings Directive) to improve cross-border tax compliance. The Offshore Evasion Team has focused on clamping down on UK tax evaders, in particular:

• Moving UK gains, income or assets offshore to conceal them from HMRC
• Not declaring taxable income from overseas, or taxable assets kept overseas
• Using complex offshore structures to hide beneficial ownership of assets.

The tax gap for 2014-2015 is estimated to be GBP36 billion, with GBP 5.2 billion attributed to tax evasion.

HMRC launched the campaign ‘No Safe Havens’ in 2013 with the objective of ensuring that there are no jurisdictions where UK taxpayers can hide their income and assets. It also implemented a number of disclosure facilities to give people the incentive to come forward and pay tax voluntarily, before they are detected and sanctioned.

In the last two years, HMRC has vigorously escalated its tax evasion strategy. The Worldwide Disclosure Facility opened last September, in addition to a new requirement for all financial institutions and tax advisers to notify their customers about new automatic exchange of information agreements.

The following further measures are due to be implemented in 2017:

Corporate Criminal Offences of Failure to Prevent Facilitation of Evasion
This will apply to corporations who fail to prevent their agents from criminally facilitating tax evasion (facilitating evasion is already considered a criminal offence). The offences will apply to domestic or overseas corporations whose agents facilitate the evasion of UK taxes, or a domestic corporation which facilitates the evasion of tax overseas.

Tackling Offshore Tax Evasion: A Requirement to Correct
Taxpayers will be obliged to disclose any outstanding UK tax related to offshore investments or assets, or face ‘failure to correct’ penalties. These penalties will be significantly higher than for those who voluntarily put their affairs in order, and will be a minimum of 100%.

STEP’s Technical Committee has submitted responses to a variety of HMRC’s consultation papers relating to tax evasion below:

 

Emily Deane TEP is STEP Technical Counsel