Changing a trust from taxable to non taxable

Agent 'help' line

Didn't find your answer?

Not really a question more of a venting....and a painful lesson learned.

I rang HMRC today as a trust had incorrectly been originally registered as taxable as at the time it was created the trustees were not sure if they were going to put any taxable investments in it. As it was registered as taxable a UTR was created and a tax return issued for 2023-24. However no taxable investments are in the trust so I asked HMRC if they could update the records and mark the return as 'nil'. Simple enquiry? Of course not.

The advice I was given after a 45 minute wait on the phone was as follows:

The only way of doing this is for the trust to be claimed through the TRS then for us to be granted access as agents to update the trust details. Then as agents we can  close the trust then start a new registration of the trust as a non taxable trust. And send HRMC a letter confirming all this so that they have a paper trail on record.

I was tempted to ask why HMRC dont market little Hector dolls (remember him?) as stress balls/voodoo dolls to stick pins in while you are waiting for someone to answer the phone......

Moral of the story is only register a trust as taxable if you are 100% sure it is, or will be. Otherwise unravelling it is painful.

Need a little lie down now.

 

 

Replies (5)

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By More unearned luck
04th Jun 2024 18:02

Don't confuse trustees' TRS obligations and their TMA obligations just because HMRC do.

TRS

I understand that it is not possible to update the TRS with the fact that a trust is no longer taxable (or was never taxable)- the functionality isn't there yet. You must write to HMRC about that. I don't see why you should be obliged to tell the TRS that the trust has been 'closed' (especially as that would be untrue*) and to start again.

HMRC conflate trustees' s 7 TMA and Reg 45 obligations which causes them to give confusing and wrong advice.

*Isn't it scandalous that HMRC officers are telling people to provide deliberately false information to an anti-money laundering 'service'?

The 'claiming' process should be done in any event and, if the trustees wish to delegate maintaining the TRS data to you, the agent access process.

The NTF

On the taxation side, rather than ask HMRC to pretend that a nil return has been filed, ask for the NTF to be withdrawn. I've yet to have HMRC refuse such a request. I don't think that telling the TRS that the trust has been 'closed' would automatically lead to HMRC withdrawing the NTF.

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Replying to More unearned luck:
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By alisonis
05th Jun 2024 07:45

Very good point raised about HMRC advising us to lie on an AML procedure. I will take your advice and write instead. Sorry to be ignorant but what does NTF mean? Notice to file?

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Replying to alisonis:
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By FactChecker
05th Jun 2024 15:30

Yup.

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Replying to alisonis:
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By More unearned luck
05th Jun 2024 18:44

You will need to be appointed agent before you can write or you can draft a letter for the trustees to send.

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Replying to More unearned luck:
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By More unearned luck
05th Jun 2024 18:53

And a legal point: If the trustees have not 'claimed' the trust then they can't download the proof of registration and it's illegal for you to take on the trust as a client without receiving a copy of that proof. You are obliged to compare your understanding of the facts with those recorded on the proof and, if the proof is wrong or out of date, either get the trustees to correct/update the TRS entry or you must grass up the trustees.

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