Call for soft landing on trust registration penalties
An announcement by the taxman to extend the deadline for registering trusts for self-assessment does not go far enough, a pair of professional bodies is warning.
Both the Chartered Institute of Taxation and the Association of Taxation Technicians say that while they welcome the extended deadline of January 2018, it must be accompanied by a “soft landing” on penalties.
“[This] still leaves [tax] agents faced with an obligation to register large numbers of trusts during their busiest months in the run up to the self-assessment deadline,” said ATT’s Yvette Nunn.
“[Accountants] have been required to sign up to the new Agent Services account before it is fully available and, with only limited guidance available on the new system…[they’re] finding it difficult to meet an already stretching deadline.”
John Cullinane, tax policy director at the CIOT agrees. “Confirmation from HMRC that they would be willing to allow agents more time to comply with significant new obligations, or at least guarantee no penalties would be charged for registrations prior to, say, 5 April 2018, would be beneficial”, he said.
The appeals to HMRC follow the introduction of new anti-money laundering rules which require trusts liable to certain taxes to retain written records of the people involved in the creation and running of the trust.
So-called ‘beneficial owners’ are covered too, and they are the settlor (or settlors) who created the trust, the trustees who manage it, beneficiaries of the trust and anybody who can controls the trust.
The two professional bodies point out that the amount of personal detail that must be reported to HMRC, in relation to such parties or individuals, is “large”.
All the data gets inputted into a new trust register via the Trust Registration Service which, although not accessible to the public, is open to law enforcement agencies as part of a drive to boost transparency.
Currently, trustees have until January 31st 2018 to register reportable trusts on the new Trust Register, but accountants who look after the vast majority of trusts are “experiencing difficulties” with the new system, ATT and CIOT said.
HMRC announced on November 8th that it will extend a separate, earlier deadline of October 5th 2017, which applied to trusts who needed to register via the TRS for self-assessment in 2016-17, to January 5th 2018.
This followed correspondence between the bodies and the Revenue and previous calls for more time to comply with the new requirements, but the January 31st 2018 deadline still applies to a much larger group of trusts.