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Trust registration rules need to be narrowed
The publication of HMRC’s statistics on trusts (tinyurl.com/hmrctruststats) is not likely to set hearts racing. But it is worth a look because it gives a useful snapshot of the way in which trusts are being used and shows that the public narrative – trusts are the preserve of the very rich and are there to avoid tax – is far from the truth. I won’t say more here, because an article looking at the picture in greater depth will appear in a forthcoming edition.
I do, however, want to reflect on one statistic: 462,000 trusts and estates were registered in the year to 31 March 2023 of which 90% were non-taxpaying. Given that many types of trust are exempt from registration, that does leave a very large number of trusts which have had to go through the registration process even though they have no tax liability. At a time when HMRC’s resources are stretched to the limit there must be a question mark about whether the time spent on all sides in dealing with these registrations has been well spent. HMRC points out that the registration service is part of the UK’s anti-money laundering legislation and is not simply there for tax purposes. But even so there must be a question about whether all these registrations are really needed.
I am reminded of what happened when form 42 (share incentives) was introduced. Its scope was so wide that thousands of returns were made where HMRC had no interest in the information they contained. Rumour was that boxes of complete returns hung round 100 Parliament Street for years because nobody knew what to do with them. The filing requirement was revised to something much more sensible: perhaps the same should happen here.
If you do one thing…
See the update on obtaining overlap relief details in the October 2023 issue of the Employer Bulletin (tinyurl.com/hmrceboctoverlap).
