Update: 4 September 2018
HMRC would like to notify members regarding a mismatch problem with the SA950 Trust and Estates Tax Return Guide and the SA900 2017/18. The original guidance notes indicated that untaxed interest could be declared at boxes 9.2 to 9.4 when in fact, if box 9.3 is populated with ‘0’, automatic capture of the return will fail. This has caused a backlog of rejected returns requiring manual capture and, therefore, significant delays. The correct action is that all untaxed interest should be declared at box 9.1 instead. The SA950 guidance notes were updated on 24th August to reflect this. HMRC’s Software Developers Support Team has been in touch with commercial software suppliers to alert them of the change.
The next issue of HMRC’s Agent Update due for publication 17 October 2018 will also highlight this issue.
STEP attended a meeting with HM Revenue & Customs (HMRC) and HM Treasury (HMT) last month to discuss the operation of the Trust Registration Service (TRS) and its progress, and the implementation of the EU’s Fifth Anti-Money Laundering Directive (5MLD). The following feedback was provided.
Operation of TRS
The TRS GOV.UK guidance should be published by the end of June 2018. The 22 November FAQs (hosted on STEP’s website) will not be updated in the meantime.
HMRC has allocated a 15-month timeframe to enhance the online functionality and make it more efficient for future service. It will be seeking volunteers to assist with piloting the new system shortly.
In situations where non-resident trustees have bought a UK property (and paid Stamp Duty Land Tax – SDLT), but have no UK income tax or capital gains, they should not be receiving demands for four years’ tax returns from HMRC. This will be addressed.
Named beneficiaries must be identified on the TRS, which is part of the EU Directive, and HMRC is constrained on this point.
HMRC is aware of the issue where the system requires the Unique Tax Reference (UTR), trust name or postcode to be matched to HMRC’s records, and access is being denied.
Delays to UTRs being received following registration of trusts and complex estates are being investigated.
HMRC will endeavour to produce more guidance on complex estates in the GOV.UK guidance.
The paper and online system will be amalgamated as soon as is practical.
HMRC is aware of the widespread dissatisfaction around the penalties, and has confirmed that it will take a soft approach this year.
HMRC introduced dummy variables to enable registration to proceed on the TRS, but will no longer accept them.
There will be no more trust registration deadline extensions in 2018.
HMRC is considering changing the March deadline to align with the Self-Assessment deadline, 31 March or 5 April.
The 28-day period to save and return data will be reviewed, and possibly extended.
The functionality is still not available to complete Q20 on the SA900, which should be left blank.
The EU’s 5MLD will extend the TRS to all UK express trusts and non-EU trusts that own UK real estate or have a business relationship with a UK Obliged Entity. The new Directive will require HMRC to share the trust data with Obliged Entities and anyone with a ‘legitimate interest’ – the latter term will be defined in full in due course. STEP is liaising with HMT on this.
HMT is planning to publish a policy consultation in winter 2018/19* that will last for eight weeks, followed by a consultation on draft legislation in spring 2019* that will last for four weeks.
5MLD is expected to come into law at EU level later in June 2018, with a transposition deadline of around December 2019, and an implementation deadline of around February 2020.
STEP will keep members apprised of any further developments.
Emily Deane TEP is STEP Technical Counsel