Tax: More time to respond on trusts
Now that the deadline has been extended, Donald Drysdale encourages practitioners to provide input to HMRC’s current consultation on the taxation of trusts.
Filing season is over
For tax practitioners who have slaved to submit their clients’ personal and trust returns in recent weeks, the pressure has finally lifted. The 31 January tax filing deadline has passed, and with any luck you’ve been able to enjoy a worry-free weekend.
The annual tax cycle continues regardless, and this may be a good time to catch up on other tasks that were held in abeyance during the filing season.
The use of trusts
In my article How should trusts be taxed?, published here on 14 December, I explained that previous tax reforms have reduced the scope for using trusts to avoid or evade tax. The Government now wants to address any such opportunities which still exist, eliminating unfairness and unintended consequences, whilst also facilitating the straightforward use of trusts where they are the appropriate legal mechanism.
HMRC suggest that the correct approach should be based on three policy principles. Trusts should be sufficiently transparent to prevent their use for tax avoidance or evasion. Trust taxation should be fair and neutral – neither encouraging nor discouraging the use of trusts. It should also not be so complex as to discourage the use of trusts where they are the most suitable legal arrangement to achieve legitimate goals.
Deadline extended to 28 February
I expressed concern that HMRC were inviting input from practitioners at a time of year when most of those interested might be too hard pressed to respond.
I even wondered, cynically, whether their consultation on the taxation of trusts had been set to close one day before the 31 January tax filing deadline to discourage responses.
I’m sure others must have made the same point, and perhaps HMRC have been in listening mode. In any event, they announced in January that the closing date for responses has been extended to 28 February 2019.
Your chance to respond
The purpose of the consultation on the taxation of trusts is to gather views on policy design and any suitable possible alternatives before HMRC consult later on specific proposals for reform.
If you have views which you would like to share with ICAS to inform its response, please email the ICAS tax team.
Article supplied by Taxing Words Ltd