The Association of Tax Technicians (ATT) is calling for a reduction of red-tape on small family trusts.
The leading professional body insists that such trusts are “often about asset protection” rather than tax avoidance.
It comes after HM Revenue & Customs (HMRC) published a consultation on the future of taxation of trusts.
Trusts are most often used in the context of family and inheritance planning in order to protect and keep assets within a family. For example, where an individual has remarried, creating a trust via their will on death is often the only practical approach to ensure that an individual’s current spouse can benefit from income or the use of assets such as the family home, while ultimately allowing the asset to revert back to any children of their previous relationship when their current spouse dies.
However, the ATT argues that trusts are subject to too many transparency measures and reporting obligations such as the recently created UK Trust Register.
“We are concerned that families will be discouraged from using trusts where they are appropriate because of fears that privacy over trust assets could be lost if further legislation is enacted”, said Jon Stride, Co-Chair of the ATT’s Technical Steering Group.
“While trusts obviously need to be transparent with HMRC about their assets and comply with all their tax obligations, it is much less obvious why a simple family trust with relatively modest assets and no overseas connections should be open to the same degree of public transparency as a complex trust structure with very valuable assets located in offshore jurisdictions. There is a point where exposure to such public-interest transparency becomes disproportionate.”
In its response to the consultation, the ATT has highlighted a number of areas where the UK Trust Register could be improved to ensure that trustees “do not have to waste time and costs duplicating the provision of information to HMRC”.
The ATT also suggested how information supplied on the Register could be used to help remind trustees about their tax obligations.
To read the ATT’s submission in full, please click here.
For help and advice setting up a family trust, please get in touch with our expert team.