Trustee Investment/Inheritance tax

Giddygelding

We have just discovered an Investment that was supposed to be set up as a trust 3 and a half years ago was incorrectly set up in the sole names of the joint Investment holders. The investment company have said they have no paperwork to say it should have been a trust. 

It was set up to remove the funds from inheritance tax liability after 7 years of the trust.

We have a paper trail of discussions and advice from our financial advisor to say this was supposed to be trust and that it was a trust (even as recent as May 2024)

Our financial advisor says it doesn't matter what the investment company have and that it is ultimately hmrc who will decide if it is subject to IHT. 

This has significant financial implications and we have lost 3 and a half years already towards the 7years IHT

1. Who is liable for any financial loss?
2. Can we contact HMRC direct now?

Any other advice welcome.

Thank you

Keep_pedalling

If the trust has not been registered with HMRC then they will consider the saving to still be owned by yourselves. Who did you appoint as trustees?

Hopefully you will both keep breathing for the next 7 years so there will be no financial loss

There is now the issue of taxation on the investments for the last 3.5 years which had it been in a trust would have been the responsibility of the trustees, but as it appears the trust was never set up falls on you.

As all the correspondence was with your FA then the fault lies with them and the trustees.

Malthusian

What kind of trust was this supposed to be? Investments in bare trust are typically held in the names of the trustees (i.e. the names on the account would be Mr Gelding and Mrs Gelding, not "Trustees of The Mr & Mrs Gelding Trust"). But there is typically an irrevocable designation attached to the account (often the beneficiary's initials), and you've suggested there isn't one. Plus bare trusts must still be registered with HMRC.

If none of those things happened it's a stretch to argue these funds have been held in trust. 

Is this definitely not a bare trust with a designation entered on the application forms?