Tag Archives: Simon Hodges

OTS report supports STEP’s calls for simplification

Simon HodgesThe UK Office of Tax Simplification (OTS) has published its first report of its review into inheritance tax (IHT).  The report, in which STEP is widely quoted, finds that the process for completing IHT forms is too complex and old fashioned, and that too many people are having to fill them in unnecessarily.

The OTS is undertaking this two-part review of IHT in response to the request from the Chancellor of the Exchequer in January 2018. Since the review was announced, STEP has been in regular contact with the OTS. STEP’s response to the consultation was one of more than 3,500 to be submitted to the OTS, with the overwhelming majority seemingly negative about the IHT process.

The report concentrates on the concerns and administrative issues facing the public and professional advisors when confronted with the IHT process and related forms. It includes a number of positive recommendations, such as potentially reducing or removing the requirement to submit forms for smaller or simpler estates, especially where there is no tax to pay; having standardised requirements; and automating the system by bringing it online.

STEP has long argued that the IHT system is too complex, and that any moves to simplify the process, particularly through the implementation of a digital system, will be beneficial for bereaved families.

The Chancellor will now review the OTS recommendations before deciding whether to implement or ignore them. The key recommendation from the OTS, that ‘The government should implement a fully integrated digital system for inheritance tax, ideally including the ability to complete and submit a probate application,’ will be the mostly keenly watched, not least by STEP members.

As the report notes, inheritance tax and probate are closely linked, so it is timely that the OTS recommends that HMRC and HM Courts and Tribunals Service (HMCTS) liaise on streamlining the payment and probate process. As has been widely reported, legislation currently before the UK parliament would see a radical change to the probate fee system in England and Wales, and will mean an increase in fees for the vast majority of families. This approach has already been criticised in the House of Lords, and this latest OTS report further highlights the need to simplify the tax system surrounding death, rather than complicate it further.

We will keep members updated.

Simon Hodges is Director of Policy at STEP

HMRC message regarding SA900 forms

Simon HodgesUpdate: 18 January

Further to the post last week alerting members to an issue with SA900 forms, HMRC has issued the following update:

‘In December 2017, we advised of an issue affecting a small number of SA900 forms filed electronically which resulted in some inaccurate calculations where there is a capital gain liability. The problem has now been resolved and calculations should now be correct for returns filed from 16 January 2018.

As previously advised, you should pay the tax that you calculated as being due by the payment deadline of 31 January. If you have already filed, your return will be checked and corrective action taken where necessary.’

Original blog:

STEP has been alerted by a member to an issue affecting the calculation of tax by HMRC of those who have submitted SA900 forms electronically. The issue was first spotted just before Christmas, when it appeared that the HMRC systems had been incorrectly calculating capital gains tax. The member was informed that the records would be amended within three working days.

Having contacted HMRC, STEP has been asked to disseminate the following message from HMRC to our members:

• We are aware of an issue affecting a small number of SA900 forms filed electronically. This is resulting in inaccurate calculations being issued in self-calculation cases where there is a capital gain liability. We are fixing this problem and expect it to be resolved very soon, and will update you when the matter has been resolved.

• If you have opted to self-calculate the liability due on your SA900, we ask you to use your self-calculated amount when you make a payment against your SA account by the due date.

• We are sorry for any inconvenience.

We will keep our members informed of progress.

Simon Hodges is Director of Policy at STEP.

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.

Technical hitches remain for access to UK Trust Registration Service

Simon HodgesAgents remain unable to access the Trust Registration Service (TRS) after technical errors were identified in the system, HMRC has confirmed. However, the deadline for completing the register of a trust for self-assessment and providing beneficial ownership information remains 5 December 2017.

This news comes shortly after HMRC published its comprehensive guidance for the new online register of trusts on Monday 9 October, following the launch of the service in July 2017. This was to be the first phase, allowing trustees to access the TRS, and so ensuring that HMRC met with the basic legal requirements of the EU Fourth Anti-Money Laundering Directive.

The second phase, allowing agents to access the TRS on behalf of trustees, was to be delivered in October. However HMRC has notified STEP that it has identified technical errors in the course of testing this phase. HMRC reassures us that it is resolving these issues as quickly as possible, so that the system works from the moment it is released.

HMRC has also reiterated the timeline, noting that there will be no penalty imposed where registration is completed after 5 October 2017 but before 5 December 2017.

HMRC has said it will provide STEP with an update next week. We will keep members informed.

Simon Hodges is Director of Policy at STEP

Policy watch: Debating the UK Finance Bill

Simon HodgesSTEP members may be interested in a reasoned debate that took place last Wednesday, 6 September in the UK House of Commons, which gave some insight into the view of both the opposition and the government as to how offshore trusts are perceived.

Parliament came back from its summer holidays last week, albeit not for long (it goes back into recess on Thursday when MPs go off for conference season), but already lively discussions have been had over tax issues as part of a debate on the elements of the Finance Bill that were held up before the summer due to the general election.

Overall, 48 Finance Bill resolutions were left outstanding from the previous session. With the Brexit bill seemingly taking up most of the short amount of parliamentary time available this month, this bit of legislative housekeeping didn’t attract the biggest crowd but raised some interesting points none the less.

The 48 resolutions were debated together, though some areas were clearly more interesting to MPs than others, not least the issue of non-domiciled tax status. Speaking on the subject, Mel Stride, the Financial Secretary to the Treasury, said that the measures in the Finance Bill would help to make the tax system fairer while also forecast to raise GBP1.6 billion over the next five years. He added that: ‘Most importantly, permanent non-dom status for people resident in the UK will be ended, so that they pay tax in the same way as everybody else.’

Peter Dowd, Labour’s Shadow Chief Secretary to the Treasury, naturally disagreed, calling the measures on domicile ‘sieve-like’ and arguing that the rules on business investment relief ‘will allow non-doms to remit funds into the UK without paying usual taxes’. Wes Streeting, a Labour MP sitting on the Treasury Committee, said that ‘the Government are saying clearly “if you have a trust overseas before the rules kick in, don’t worry; we’re not going to touch that money”.’ He went on to say that he recognised that many are family trusts – and, later still, that he understands the ‘parental instinct’ to want to pass on assets – but argued that there was an unfairness in not applying retrospective changes to non-doms in the same way as different measures affect many others.

Concluding the debate for the government, Stride addressed what he saw as Labour criticisms of offshore trusts, stating: ‘Let me be clear again: if funds are taken out of trusts, they will be taxed in the normal way. In recent years, we have reached important international agreements on the automatic exchange of information to ensure that we can effectively monitor those movements.’ Addressing Streeting’s points, Stride reiterated that funds remitted out of non-dom trusts will be taxable. But addressing the idea of greater parliamentary scrutiny of HMRC – Streeting has suggested the Treasury Committee could look at its work more closely – Stride argued that ‘the idea of politicians getting directly involved in the tax affairs of individuals…would be a dangerous road to go down. I do not want politicians interfering in people’s tax affairs; I want to protect tax confidentiality’.

Under Jeremy Corbyn, Labour will likely return to some of these issues again, possibly at its party conference later this month. For the Conservative government, for now they will move on and publish the draft clauses for the Finance Bill to follow the Autumn Budget this Wednesday, 13 September 2017. The consultation on these draft clauses will be open until Wednesday 25 October 2017.

 

Simon Hodges is Director of Policy at STEP