This Q&A assumes that the trust in question is not a trust registered in the European Economic Area (EEA).
Broadly, the non-UK trusts which are required to register under the Trust Registration Service (TRS) are:
- •non-UK express trusts with a UK tax liability
- •non-UK express trusts which acquire UK land, or
- •non-UK express trusts which have at least one UK resident trustee and enter into a UK business relationship
This Q&A assumes that only category a. is relevant to this query. As such, it is a ‘taxable relevant trust’ as defined in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, reg 45(14):
For the purposes of this regulation, a taxable relevant trust is a relevant trust in any year in which its trustees are liable to pay [inheritance tax (IHT)] in the UK in relation to assets or income of the trust.
The extent to which the trustees of a non-UK trust are liable to IHT depends on the type of trust, the domicile of the settlor when they created the trust, and the situs of trust assets. The two main IHT charging regimes for trusts, the relevant property regime trusts and qualifying interest in possession (QIIP) trusts. The charging provisions for these two regimes are set out in Part III of the Inheritance Tax Act 1984 (IHTA 1984).
- •the trustees of the settlement
- •any person entitled (whether beneficially or not) to an interest in possession in the settled property;
- •any person for whose benefit any of the settled property or income from it is applied at or after the time of the transfer;
- •where the transfer is made during the life of the settlor and the trustees are not for the time being resident in the United Kingdom, the settlor.
HMRC’s view is that the trustees are primarily liable as a result of the termination of a QIIP during the lifetime of the QIIP beneficiary, and for charges under the relevant property regime (IHTM30091)—Liability on settled property: persons liable.
IHTA 1984, s 205 provides that ‘except as otherwise provided, where under this Act two or more persons are liable for the same tax, each of them shall be liable for the whole of it’.
This Q&A has not been able to find any statutory or other authority which would indicate that payment of a tax liability by a person other than the trustee, renders the liability of the trustee void for the purposes of the TRS.
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