A summary of key legal updates for the Private Client sector over the past two weeks is as follows.
Trust Register and non-taxpaying trusts
HMRC has announced to a stakeholder group that the Trust Registration Service ("TRS") will start to accept registrations from non-taxpaying trusts in September 2021. Such trusts were out of scope under the previous Trust Register regime but, following the UK's implementation of the EU's Fifth Money Laundering Directive, now need to be registered. Despite the amended UK legislation coming into force in October 2020, the TRS has to date not been expanded to deal with non-taxpaying trusts: meaning there is an obligation to register, but not yet the ability to do so. The registration deadline for non-taxpaying trusts is 10 March 2022 but, given the delay, HMRC has confirmed that this will be extended to provide a period of approximately twelve months from the date the expanded TRS opens. If this is sometime this September, the registration deadline should therefore be around September 2022. Trust Registration Service: TRS to be open for MLD5 trust registrations from start of September | Practical Law (thomsonreuters.com)
Post-pandemic tax reform
Rumours continue that pensions will be targeted to help pay for the government's spending during the pandemic. Boris Johnson has reportedly been advised to temporarily suspend the long-standing "triple lock" in respect of calculating state pension increases. This would avoid the state pension increasing by around 7% and save the government billions of pounds. Exclusive: Pension triple lock to be watered down by Government (telegraph.co.uk). Rumours in respect of CGT reform also continue following the publication of CGT receipts for 2019/20. CGT liability was up 3% to £9.9 billion: an increase of half as much as in 2018/19. These figures may increase calls for reforming the taxation of capital wealth such as by more closely aligning CGT rates with income tax rates as recommended by the Office of Tax Simplification in November 2020. EPrivateClient - article (paminsight.com)
Forged Will case
Rainey v Weller & Ors  EWHC 2206 is another example of a forged Will case. Such cases appearing to be on the increase, with this being the fifth in around twelve months. The High Court found that the testatrix's son had concocted the Will in question and forged her signature after he was excluded from the existing Will in favour of the testatrix's niece. The expert handwriting evidence was instrumental in the ruling. As the judgment notes, this is "another sad and bitter family dispute concerning wills."
Trusts and estates with trading income – tax reporting
Under a consultation published on 20 July, HMRC is proposing to change the timing of income tax reporting for unincorporated businesses (including trusts and estates, as well as many law firms) with trading income. The proposal is to move from a current accounting year basis to a tax year basis. The Law Society has picked up that the reform (if implemented) will result in extra tax liabilities for many affected businesses next year because many will need to effectively allocate 23 months of profits into one transitional year. The reforms are introduced "under the guise of simplification, but could generate a badly needed windfall of more than £1bn for the Treasury next year". The consultation closes at the end of August. Reporting year change could hike firms’ 2022 tax bills | News | Law Gazette