New Guidance From ICAEW, CIOT and STEP on Trusts

The Institute of Chartered Accountant for England and Wales along with STEP and Chartered Institute of Taxation has recently issued guidance when trusts are to be considered UK resident.

The guidance has been agreed by HMRC and covers the application of trust residence rules.

Example case studies are used to demonstrate the principles behind the guidance.

The rules used to determine whether a trust is classed as being resident in the UK, centres around inter alia whether the trust is operating through a permanent establishment or branch or agency in the UK.

The guidance was produced following concerns from all three parties that the finance act of 2006 lacked detail and clarity.  There was concern that the act did not even provide rules relating to different types of trusts and the trustees responsibilities. Concern has been raised that the finance act was deterring trustee investment in the United Kingdom.

The three bodies are now in dialogue with HMRC on how to improve the rules concerning trustee residenceship.

More information and guidance can be found the STEP website.