Her Majesty's Revenue and Customs (HMRC) recently surprised many with a statement that the government does not intend to remedy a defect in recently introduced legislation relating to the tax treatment of non-resident protected settlements. The defect means that gains realised by non-resident trustees on the disposal of offshore funds that are not registered with HMRC as having "reporting status" will be subject to income tax as they arise once the settlor is deemed domiciled in the United Kingdom.
The territorial scope of UK income tax for non-UK resident persons is generally limited to certain types of income that have a UK source. To help Her Majesty's Revenue and Customs collect the tax due on the interest received by a non-UK resident lender, the debtor is required to deduct income tax at the basic rate from the interest payments. The Court of Appeal recently confirmed that the multifactorial test is the correct approach for establishing the source of such loan interest.
The Finance (No 2) Act 2017 contains provisions requiring the disclosure of historic non-compliance to Her Majesty's Revenue and Customs by September 30 2018 (ie, the requirement to correct rule). This is part of a range of legislation targeting offshore tax evasion. Defences for failing to comply with the requirement to correct are limited and it may be insufficient to have relied on legal or tax advice. Prompt action is required to potentially avoid very significant penalties.
Her Majesty's Revenue and Customs (HMRC) recently issued an updated set of frequently asked questions (FAQs) regarding the new online Trust Registration Service and the information that certain trustees must maintain and report. In addition, HMRC confirmed further extensions to the deadlines for the registration of trusts with its online service. Details of the availability of the relevant online services have also been included in the FAQs.
The government recently enacted legislation which obliges trustees to collect, maintain and disclose information about trusts and related individuals. The information must be provided via Her Majesty's Revenue and Customs' (HMRC's) new online Trust Registration Service (TRS). As part of the regular new guidance on the practical operation of the TRS register, HMRC has released a set of frequently asked questions which deal with some areas of uncertainty.