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Trustees Warned Over Tax Return Requests

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A quick check of the HMRC gateway system by trustees, or advisers to trustees, is usually enough to confirm if a trust is required to complete a tax return for any given tax year. For 2015/16 a little bit more work may be required.

In a number of cases the HMRC gateway has shown that a 2015/16 trust tax return has been issued for a trust on 5 April 2016 where it has previously been agreed that annual tax returns are not required.

The trust office at HMRC has confirmed that where their systems are showing a tax return has been issued this may be an error in their online system, and in fact in a lot of cases no corresponding notice to complete a tax return has been issued to the trustees. As a result, no return is actually due, unless of course the circumstances of the trust require that a return must be submitted.

Those that work with trusts will know that where the trust is not in receipt of any taxable income or gains HMRC may agree to only issue tax returns on a periodic basis, relieving the trustees of the obligation to file a tax return on an annual basis. In addition, trust returns are not always required for life interest settlements where all of the income is mandated to and reported on the tax return of the life tenant.

Where the HMRC gateway is showing that a 2015/16 tax return has been issued to trustees who are not expecting to complete a return a call to HMRC will confirm if this is correct. Trustees and advisers that solely rely on HMRC online services for whether a 2015/16 tax return is required could incur unnecessary costs in completing a tax return that is not in fact due.

But a word of warning, if trustees are not expecting to complete a return they should not simply assume that a tax return issued per the gateway is an error. If a tax return has been issued it must be filed by the trustees or their agent, even if it is a nil return, in order to avoid a penalty. Those who submit paper returns have until 31 October to establish if a return is due and to submit it to HMRC, with a deadline of 31 January 2017 for those who choose to file online.

Joan Foster

Joan works closely with each of her clients to help them fulfil their compliance obligations and to give rounded, jargon free, expert advice regarding their tax affairs. Trust and estate work is a particular specialism of Joan’s, she regularly advises both family and professional trustees and executors regarding tax and accounting matters.

Joan joined RSM in 2004 after qualifying as a certified chartered accountant and chartered tax adviser. Joan’s dedication to private client work has been recognised with her being included twice in the Private Client Practitioner Top 35 under 35 list. A list that celebrates those professionals at the forefront of private client work.

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