Family Trust HMRC registration 7 August 2022 at 10:44AM edited 7 August 2022 at 10:54AM in Deaths, funerals & probate 16 replies 991 views

KevCan86

Hello,

I'm resident in Scotland and about 4 years ago my parents put the family house into a trust for which I am the beneficiary. There are no other transactions on the trust and no tax liabilities

Yesterday my parents  received a letter from their lawers who set up the trust, advising that the HMRC have changed the laws around trusts and all trusts now need to be registered even if the don't have any tax liability. They say we need to do this by 1st of September or the trust could be fined, they also say it will be £300 + vat to register with on our behalf and then £300 + vat to submit the annual tax return.

Am I correct to think the lawyers could have told us about alot earlier? It seems the law was not just announced recently much and now to only be given 3 weeks notice to comply isn't much notice to sort this out.

Is this something that could easily be done ourselves? It sounds like £300 + Vat to register with HMRC and the £300 + vat to submit what is essentially a blank tax return every year seems alot

Why are HMRC doing this? Seems like a waste of time for all involved when there is no tax. Also are lawyers just being opportunistic and cashing in on this charging £300 for submitting blank forms every year?

We haven't had a chance to call the lawers yet and discuss as this only happened yesterday and they are closed for the weekend. I will be calling them tomorrow but wondered if anyone in the know could tell us anything useful before  speaking to them?

Any advice would be appreciated.

Thanks

Kevin

Keep_pedalling

There may be no tax now but there is likely to be a CGT liability when the estate is wound up in the future.

The lawyers probably did not mention the possibility of this happening for the same reason they might have not warned your parents about deliberate deprivation of assets, they did not want to lose there fat fees for setting up a dodgy trust to avoid care costs.

getmore4less

Who are the trustees?

They are responsible for managing and monitoring the regulations.

KevCan86

Well the trustees are my mother, my aunt, the solicitor and myself. That said it is not as if we are checking HMRC regulations for trusts on a regular basis the solicitors are the appointed agents to deal with such matters and are in the business of setting up trusts so would expect more from them in terms of communication of any hmrc changes.

Anyway I did not come on here to figure out who's to blame for the now urgent deadline. Was looking for advice on the best course of action going forward in terms of doing the submission ect.

SevenOfNine

One of the trustees of the trust my brother paid rather a lot of money to have set up (finalised only a couple of months ago) has just found out about this.

She is going to complete the paperwork herself, as the person who set the trust up wanted a couple of hundred £, she's an accountant & seems to have found out this must be done BEFORE him.

Perhaps you should google the process, maybe check .gov.uk site for registering a trust & see how hard/simple it looks. Instructions usually accompany the forms to be filled there.

Info might be this?  https://www.gov.uk/guidance/trust-registration-extension-an-overview. Not sure if it applies to Scotland. I took a look at the link to exemptions, as quite a lot of people have the life interest trust (different to the type your parents, & my brother, have), a quick glance looks like they're not exempt from this registeration either. But I'll leave this out there for others to figure out for sure!

getmore4less

KevCan86 said:

Well the trustees are my mother, my aunt, the solicitor and myself. That said it is not as if we are checking HMRC regulations for trusts on a regular basis the solicitors are the appointed agents to deal with such matters and are in the business of setting up trusts so would expect more from them in terms of communication of any hmrc changes.

Anyway I did not come on here to figure out who's to blame for the now urgent deadline. Was looking for advice on the best course of action going forward in terms of doing the submission ect.

Pay your appointed professional agents or step up as trustees.

Here is one link 
https://www.gov.uk/guidance/manage-your-trusts-registration-service

Look at the history a years notice was given

RAS

Kev

A alternative experience.

Received a letter regarding the registration of trusts.about 4 months ago from a legal firm I used several times, but over a decade ago,

They had decided that rather than work their way through all their client records to see who needed alerting, they would contact their entire client list.

Apologies if this didn't affect me, but if I'd set up a trust through them or anyone else, please be aware that action was needed.

And if I didn't want to do it myself, or needed advice, please contact them.

kate-e-kat

My parents received a similar letter on 26th July from their Financial Advisers who set up a trust for the family home, with my brother and I as beneficiaries.  They phoned me yesterday to make me aware.  My first worry was that it could be a scam (they are in their 80s) but having checked the letter it seems genuine.  But I'm also questioning why they were given such little notice?  The Financial Advisers want £500 to set it up for them which seems a lot but they probably won't have much choice as they are not particularly internet savvy and don't know any accountants to the best of my knowledge.

meldrew70

This is a nightmare! Received letter from the Prudential to say we had to set up a trust by 1st September or face penalties. PRU say they will not help or advise and to contact solicitor or Financial Adviser. So far, FOUR F.A's have failed to return calls or say they can't do this as they're not an "organisation". Have registered as an individual on Government Gateway but you can't register as an organisation. Phoned HMRC helpline without success - they're going to send out a leaflet. What are we supposed to do???

whizzywoo

I too have recently come across the legislation. 

My Mother left half of her house to her children.  My Stepfather owns the other half but has a lifetime interest to live in the house until his death. 

I assume that this the sort of trust which needs to be registered?

They were not married, although lived as man and wife for over 30 years.

Going to speak to my Stepfather about this and suggest that we need to see his solicitor to find out.  They have not contacted him concerning the trust.

in_my_wellies

Hi
My mother was persuaded to put everything in two trusts. I don't know for what purpose as she is not except from care home fees or IHT but it's too late to find out now. As she no longer has capacity there has been a lot to sort out but we shall see. 

I'm now a trustee on both and was informed about the registration in about May. The solicitor who updated the trust quoted £350 + VAT and her IFA quoted £150 for each trust but also sent me the link to the .GOV site

Both advised I could do it myself so last week I bit the bullet and tried. Once I had opened a new gateway account (for an organisation) it was quite simple and took only a few minutes. The most difficult part was having to log in about 10 times because I was taking too long reading the text and it kept logging me out. 

I would say have a go yourself before paying. The last page says something like 'filled in honestly, best of my knowledge......'. I have the documents I copied the info from so as an ordinary person I shall argue that I did my best if I got it wrong.