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How Not To Get Bogged Down With Trust Accounts?

Trust Property Income - "Trusts Can't Use Cash Basis" - It's Official!

Just thinking out loud on this one.

According to the 2017/18 trust tax return, we are told by HMRC very plainly for the first time on page TL 2 box 3.19A that "trusts can't use cash basis" for property income. There is not even any de minimus limit. So, for trust tax return purposes I adjust the income and expense figures for accruals and prepayments. Well, if I have to I have to. Just some extra number-crunching involved. And most of my property income accounts contain an adjustment for accrued accountancy anyway.

But trust accounts are meant to be presented in as simple a style as possible, so that the lay-trustee can simply and quickly digest the accounts information. They may wonder why rents received do not equate to rents banked, and they will not usually have access to the detailed workings.

I assume therefore that for trust accounts purposes it is acceptable to use instead a hybrid cash/accounts basis using the most simple presentation style possible so that the trustee can easily understand what has occurred without too many mind-numbing accruals and prepayments involved (apart from those absolutely necessary to reveal).

Or should I take a consistent accounts basis for both trust tax and trust accounts purposes.

I appreciate that many different presentation styles are used up and down the country. There is no law on trust accounts presentation.

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08th Dec 2018 10:41

So you are proposing to “simplify” the accounts by making them more complicated?

If the trustees don’t understand accrual accounting you can educate them.

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