Year-End Planning Series – Part 4: Tax Administration

The final part in our Year-End Planning Series covers Tax Administration and some of the key things to consider to ensure things are in order before the year-end.

Keep adequate records

It is important to be able to substantiate tax return entries with underlying records, particularly in the event of an enquiry. Depending on the source of income or gains, there is a requirement to retain the underlying records for up to 5 years from the 31 January following the year of assessment.

We also recommend that clients keep a schedule of any gifts that they have made to friends, family or charity for the purposes of Inheritance Tax Planning. This really assists if and when the time comes to account for the gifts as being out of capital or from surplus income and also the timing of the gifts.

Trust Register

Trustees who are liable to UK tax are required to register, and keep records current, on HMRC’s Trust Register. This requirement applies to all UK trusts, where the trustees are liable for tax. It also applies to non-UK trusts, where the trustees own (or are effectively deemed to own) UK sited assets, or are in receipt of UK source income and a tax liability arises to them in respect of the UK assets or income.

Trustees who are already registered with HMRC, were strictly required to complete registration under the new system by 31 January 2018. However, HMRC have effectively extended the deadline to 5 March 2018. The filing deadline for trusts and complex estates incurring a tax liability for the first time in 2016/17 was effectively 5 January 2018, since trusts who need to file a tax return but who are not issued with a return by HMRC must notify HMRC of their liability to income tax or CGT. Therefore, new trusts who have not yet registered with HMRC are recommended to do so as soon as possible.

This reflects the law in force as at 7 February 2018 and proposed new rules to apply from 6 April 2018, contained in the Finance (No.2) Bill 2017-19. Changes may be made prior to enactment of the Bill.

At RB we support our clients throughout the financial year. If you feel that you need to review any of the key areas covered in this series in advance of the year-end please contact us to discuss.

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