Wrigleys Reaction To HMRC's Taxation Of Trusts Consultation

The aim and intentions of the consultation, a summary of Wrigleys' response and the government's proposed plans.

HM Revenue & Customs ("HMRC") published a consultation document 'The Taxation of Trusts: A Review' in November 2018.

The aim of the consultation was to establish the extent to which the government's suggested underpinning principles of transparency, fairness and simplicity currently apply to the taxation of trusts and also sought suggestions for proposed reform.

The consultation document states that it "…is intended to:

Set out the government's principles for taxing trusts, and seek views on those principles; Assess the extent to which the current trust taxation system aligns successfully with those principles; and, Seek views and evidence on the case for and against reforms to address any areas of trust taxation which do not currently align with those principles." The government does not make any proposals for reform in the consultation document but suggests that options for reform will be considered once responses have been received.

Wrigleys response to the consultation focused on the current complexities and increased compliance causing day to day problems with the administration of trusts and resulting in higher costs for our clients.

A summary of the main points raised by Wrigleys from 'The Taxation of Trusts' consultation:

- Privacy needs to be borne in mind in any reform, to enable the underpinning principle of confidentiality of trusts to remain intact;

- The new proposed requirements for every express trust to be registered may prove to be excessive and disproportionate and are likely to discourage the continuity of all but the largest of trusts, due to the increased administrative burden;

- To assist settlors, trustees and their agents in providing full transparency, the ability to supply information to HMRC could be made easier and less rigid;

- The way in which inheritance tax ("IHT") is charged against relevant property trusts often creates a situation where there is disproportionality in the professional costs associated with completing the IHT calculation and forms;

- It would be fairer to bring the taxation of trusts for IHT in line with the...