Policy News provides summaries of STEP's contributions to the public policy debate on trust and estate issues through active engagement with policymakers.
24 February 2021: UK - STEP produces briefing note on gift with reservation and spouse exemption in Inheritance Tax
STEP, together with other professional bodies, has been discussing with HMRC the availability of the inheritance tax spouse exemption in relation to assets held in a trust which are treated as beneficially owned by the settlor as a result of the reservation of benefit rules. HMRC have indicated their agreement to the analysis set out in this note and propose to amend the IHT manual (IHTM14303) to reflect this.
12 February 2021: UK - STEP produces briefing note on ACC, JGJ and HPP  EWCOP 9
STEP along with the Law Society, Solicitors for the Elderly, the Court of Protection Practitioners Association, and the Professional Deputies Forum have produced a briefing note which outlines when professional deputies should seek authority from the England and Wales Court of Protection (CoP) before acting in P’s interest.
03 February 2021: UK - STEP responds to Companies House consultations
STEP has commented on three consultations which have proposed wide ranging reforms to the powers and role of Companies House. Under the new proposals, directors cannot be appointed until their identity has been verified and the register’s powers will be expanded so that it can query, investigate and remove false or inaccurate information.
28 January 2021: STEP Report - Social and Economic Benefits of Trusts
STEP has published a report on the Social and Economic Benefits of Trusts, which draws together existing evidence and research about the ways in which trusts can be, and are, used for wider societal benefit, and how they impact every facet of society. The aim is to improve understanding and address common misconceptions, presenting the positive evidence base and shining a light on how and why trusts are used.
25 January 2021: UK - STEP survey on recommendations contained within APPG for Inheritance & Intergenerational Fairness report on reform of inheritance tax
In January 2020, the All-Party Parliamentary Group (APPG) for Inheritance & Intergenerational Fairness published a report, Reform of Inheritance Tax, with two major recommendations for the government to reform the UK’s current inheritance tax (IHT) regime. The report calls for the introduction of a flat-rate gift tax, which would replace the current IHT system’s array of reliefs and exemptions. The APPG has published some FAQs on the recommendations contained within the “Reform of Inheritance Tax” report of January 2020.
With the government currently focusing on ways to remedy the financial deficit that has been caused by COVID-19, and IHT reform under the spotlight, STEP are keen to get member views on the report recommendations via a short survey.
11 January 2021: UK - Dormant assets scheme to be expanded
Following a 2020 consultation, the government has announced a significant expansion of the dormant assets scheme under which GBP800 million of unused assets from the insurance, pensions, investment, wealth management and securities sectors will be made available for community use. STEP’s consultation response in July 2020 urged that the legislation should give trustees, directors and agents explicit statutory protection from the risk of personal liability if their participation in the scheme gives rise to a loss.
07 January 2021: UK withdraws from most of DAC6's disclosure provisions
The UK government will cancel almost all of its planned implementation of the EU’s Council Directive (EU) 2018/822 (DAC6), regarding mandatory disclosure of cross-border tax planning schemes. Following the conclusion of negotiations between the UK and the EU on a Free Trade Agreement (FTA), HMRC has confirmed to STEP that only arrangements which meet the hallmarks under Category D of DAC6 need to be reported in the UK, in accordance with the OECD’s Mandatory Disclosure Rules (MDR). Therefore historic reporting (for arrangements up to 31 December 2020) in respect of the other hallmarks will no longer be required. More information can be found in the following blog produced by STEP.
05 January 2021: UK - STEP launches guidance note on the end of the Brexit transition period: Areas for members to be aware of and prepared for after 1 January 2020
With the United Kingdom’s departure from the European Union (EU) and the end of the transition period on the 31 December 2020. STEP has produced guidance which highlights the specific areas that STEP believes will most affect members. It also raises awareness of these issues and links to the relevant guidance documents to assist members.
17 December 2020: UK - CMA urges review of reserved services list in England and Wales
A Competition and Markets Authority (CMA) assessment of changes within legal services sector in England and Wales has found that many more legal firms are now providing information on price, service, redress and regulatory status than in 2016. However, it notes that there appears to have been only a limited impact on the intensity of competition between providers and sector outcomes since the CMA's 2016 study found the market was not working well for consumers. It calls for a review of the list of reserved legal activities, and a mandatory public register of unregulated providers, who will be required to provide redress. STEP's comments can be found here.
10 December 2020: UK - STEP produces note on disclosable arrangements regulations and IEIM (DAC 6)
STEP’s UK Technical Committee has produced a paper commenting on the relevant issues surrounding the implementation of DAC6 as a result of statutory instrument 25/2020, the International Tax Enforcement (Disclosable Arrangements) Regulations 2020 and HMRC’s International Exchange of Information Manual (IEIM), in the context of trusts and trust structures.
04 December 2020: UK - Professional bodies issue new trust protections note
A note jointly issued by STEP, the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales highlights practical issues and uncertainties in the statutory provisions for trust protections as introduced by the deemed-domicile provisions in Finance (No 2) Act 2017. The changes took effect from 6 April 2017 but left significant uncertainties in the statutory provisions for trust protections, mixed-fund cleansing, rebasing, foreign capital losses and the extension of IHT to overseas property representing UK residential property interests.
12 November 2020: UK - STEP replies to OTS CGT Review
STEP has submitted a response to both parts of the Office of Tax Simplification (OTS) review on Capital gains tax (CGT). The OTS has also released its report based on findings from the first part of the review which suggests that the government should consider CGT rates more closely with income tax rates, or address the boundary issues between the two taxes to discourage taxpayers from disguising income as capital gains.
12 November 2020: UK - HMRC proposes compulsory indemnity insurance for tax advisors
HMRC’s consultation on raising standards in the tax advice market has concluded with plans to make professional indemnity insurance compulsory for tax advisors. A further consultation will be held on the proposal, which derives partly from the loan charge affair in which many of the affected taxpayers had acted on advice from their tax advisors and now find themselves with no effective remedy for the consequences. The government will separately announced details of further action against tax avoidance scheme promoters. STEP's response to the consultation can be found here.
09 November 2020: UK - Further updates to HMCTS digital probate system
HM Courts and Tribunals Service (HMCTS) has announced that it has deployed an update to the digital probate system, allowing users to see the progress of each application that they have submitted via the digital probate service. Additionally, users will be able to use the MyHMCTS dashboard to see the latest action taken on their application. The exemptions page has also been updated to clarify: what must be done through the digital service; what the digital service can be used for and what can only be done using the paper form. Further improvements are also currently underway and will be announced in due course.
02 November 2020: UK - Updated guidance on DAC6 reporting of cross-border arrangements
HMRC has updated its guidance on the disclosure of cross-border tax planning arrangements under Council Directive (EU) 2018/822 (DAC6), which nominally came into force on 1 July 2020, although the first reporting deadlines have been postponed as a result of COVID-19. Any person involved in cross-border arrangements, including loan agreements, payments from a resident of one country to a resident of another, or putting funds in an offshore trust, has to report it to HMRC if one of the so-called hallmarks applies.
02 November 2020: UK - Report assesses wealth tax to rebuild public finances, post-pandemic
A panel of accountants, economists and lawyers, including Emma Chamberlain TEP of STEP’s UK Technical Committee, set up to examine proposals for a UK net wealth tax has released its preliminary analysis paper and evidence papers. The Wealth Tax Commission's final report will appear in December, and will assess the feasibility of using a wealth tax to rebuild public finances after the unprecedented public spending required to tackle COVID-19.
29 October 2020: UK - HMCTS publishes guidance letter for digital probate service
HM Courts & Tribunals (HMCTS) has published a letter regarding the mandatory digital probate service for grant of probate applications (with exceptions), coming into force on 2 November. This letter explains the steps practitioners must take to ensure they are ready for this change and where to go if they require help or support. If an organisation has not yet registered, guidance on how to register and use the system can be found on the HMCTS website. HMCTS has requested that if practitioners email for assistance, they include the word ‘probate’ in the subject of the email, to ensure the request is actioned efficiently.
The new rules will come into force on 2 November 2020; however, there will be a grace period until 30 November 2020 during which paper applications will still be accepted, to provide additional time for professional users to sign up for online accounts in readiness for the future submission of grants of probate applications via MyHMCTS.
26 October 2020: UK - STEP contributes to qualifications and regulation consultation
The Professional Associations Research Network (PARN) has submitted a collective response to the Department for Business, Energy and Industrial Strategy (BEIS) call for evidence on professional qualifications and regulation. The call for evidence requested insights on the UK’s approach to the recognition of professional qualifications and the regulation of professions from individuals, businesses and organisations that interact with all aspects of regulated professions. STEP has supported PARN’s response, along with 36 other professional bodies including ACCA, ATT, CIMA and the Law Society of Scotland.
19 October 2020: UK- OTS suggests simpler system for relief claims and elections
HM Treasury's Office of Tax Simplification (OTS) has published a report recommending ways of simplifying the process under which taxpayers make claims and elections for reliefs from income tax, corporation tax, capital gains tax and VAT. Among other things, it criticises the personal and business tax account system, the process of claiming employee expenses, and the standard of HMRC's online forms. It also suggests simplifying the Gift Aid carry back provisions by allowing part of a donation to be treated as carried back and allowing amendments within the normal timescales.
08 October 2020: UK - HMRC’s new AML regulations now in effect
The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 (991) legislation came into effect on 6 October 2020. HMRC is hoping the new system will be in place as soon as possible in 2021, to allow trustees to register trusts that are caught by the new rules and to make updates to trusts that are already registrable. This will therefore be the key date for matters such as whether a business relationship has been entered into or whether UK land has been acquired. Business relationships entered into and UK land acquired prior to 6 October should not trigger a need to register. HMRC hopes to release more information on the scope of the regulations later this autumn, and STEP continues to talk to the team about outstanding issues.
30 September 2020: UK - STEP and other professional bodies urge caution on compulsory use of online probate system
The Ministry of Justice's (MoJ’s) Consultation on plans to compel professionals in England and Wales to submit their non-contentious probate applications through the new online service developed by HM Courts and Tribunal Service (HMCTS) has closed. STEP in its response welcomed mandatory use in the case of standard, day-to-day and non-complex probate applications, for which the online system can work well. However, STEP’s particular concern is that the existing system is 'simply unequipped' to deal with a regime in which the more complex applications and those which require more niche types of grant must all be submitted online. STEP has suggested that the simpler approach would be to make online applications the default position for simple applications and that HMCTS should continue with the traditional paper method for the more complex grants. The benefits associated with moving online for simpler estates will not be possible for more complex applications until the online system is comprehensively updated to facilitate them. The MOJ response to the consultation can be found here and information on how to use the online system can be found here.
24 September 2020: UK - HMCTS releases further online probate guidance
HMCTS has released the latest FAQ and cover sheet required for using the digital probate service, reiterating that the cover sheet must always be used with an applicant’s case number included. It has also reminded that for the online submission, the legal statement should always be signed by the executor(s), and practitioners cannot yet sign on their behalf.
01 September 2020: UK - STEP publishes response to Treasury Select Committee’s call for evidence for its inquiry into Tax after coronavirus
STEP has submitted a response to the Treasury Select Committee’s call for evidence for its inquiry into Tax after coronavirus. STEP called that a strategic view should be taken in the form of a roadmap that links everything together, reducing complexity and any uncertainty in relation to the system.
27 July 2020: UK - STEP publishes guidance after remotely witnessed wills officially declared valid in England and Wales
The law of wills in England and Wales is to be amended to allow the remote electronic witnessing of wills under certain conditions. The change is to be backdated to 31 January 2020, in order to reassure the public regarding any wills that may have been remotely attested during the coronavirus epidemic. Guidance for STEP members has already been issued. It reinforces the Ministry's advice that remote witnessing should only be used in an emergency when conventional witnessing is impossible, and extreme caution is required when using it. More information can be found in the STEP Blog.
16 July 2020: UK - government publishes consultation response on 5AMLD and trust registration rules
The UK government has published the outcome of its technical consultation on implementation of the EU Fifth Anti-Money Laundering Directive (5AMLD) and its impact on trust registration. Several useful concessions have been made, in line with recommendations made by STEP, who have been consulting with Treasury regularly on the transposition of 5AMLD. In particular, offshore trustees entering into a business relationship in the UK will not have to register the trust on HMRC’s Trust Registration Service (TRS) unless there is at least one UK-resident trustee. The original regulations required registration of offshore trusts even if there were no UK trustee, which could have deterred trustees of offshore trusts outside the European Economic Area from seeking professional advice in the UK. More information can be found in the STEP Blog.
25 June 2020: UK - STEP publishes response to Legal Services Board Call for Evidence: Ongoing Competence
STEP has submitted a response to the LSB call for evidence on Ongoing Competence. STEP stated that a competence framework should encompass the core competence requirements to undertake a particular task. In its response STEP focused on defining Competence and competence assurance.
10 June 2020: UK -STEP publishes response to Bank of England discussion paper on Central Bank Digital Currency
STEP through the Digital Assets SIG has submitted a response to the BOE discussion paper on Central Bank Digital Currency (CBDC). STEPs response raises concerns over privacy and highlight provisions for death and incapacity. STEP also stated that it would like to see more debate and focus concerning how Payment Interface Provider (PiPs) as covered in the paper are appointed and will operate.
21 February 2020: UK - STEP publishes response to technical consultation on 5AMLD
STEP has submitted a response to HMRC’s technical consultation in relation to how the UK will implement the Fifth Anti Money Laundering Directive and the Trust Registration Service. 5AMLD expands upon the requirements of 5AMLD and requires all express trusts, not just those with a tax liability, to register. The Directive came into force in the UK on 10 January 2020 but the trust register requirements will not become effective until 10 March 2020.
23 December 2019: UK - STEP publishes response to independent review of legal services regulation consultation
STEP has submitted a response to the independent review of legal services in England and Wales. STEP’s response notes that ensuring all providers are appropriately qualified is essential to protect the public along with extending the current access to full redress mechanisms to include all providers of legal services. STEP welcomes any attempts to simplify the landscape for the benefit of the consumer whilst providing a further layer of protection and assurance.
5 August 2019: UK - STEP publishes response to consultation on Companies House
STEP has submitted a response to a consultation about how Companies House registers information relating to businesses in the UK. STEP's submission supported the idea of Companies House verifying the information held on its register as well as calling for more specific work to be carried out on how this can be done effectively and proportionately when trusts are involved.
10 June 2019: UK - STEP responds to 5AMLD consultation
A STEP working group has produced a response to the UK government's consultation on the implementation of the EU's Fifth Anti-Money Laundering Directive in the jurisdiction. STEP’s response recognises the need to implement the legislation, but calls for it to be a done in a way which is both necessary and proportionate to the objective of the Directive.
14 May 2019: UK - STEP contributes to OPG guidance for financial institutions
The Office of the Public Guardian (OPG) has issued guidance advising the staff of financial services and utility companies on how to deal with customers whose decisions are taken for them under a power of attorney or deputy court order. The guide, written in partnership with various regulators, notes that companies' attitudes to these legal instruments are often both confusing and inconsistent. It aims to help regulated firms such as banks to provide a 'smoother, more uniform and straightforward' customer experience, while ensuring that safeguards against exploitation are maintained. STEP was invited by the OPG to join the focus group, and helped draft the guidance.
7 March 2019: UK - STEP committees respond to HMRC Trust Consultation
Two of STEP’s committees; the UK Technical Committee and the UK Practice Committee have produced a response to the Government’s The Taxation of Trusts: A Review consultation, which was published in 2018 and explored the principles underpinning the taxation of trusts in the UK.
23 November 2018: UK - STEP responds to Law Commission consultation on the electronic execution of documents
STEP's UK Practice Committee submitted a response to the process, which covered both documents where there is a statutory requirement for a signature and deeds, as well as a technical annex with further information.
19 October 2018: UK - Professional Body Q&As on Cleansing published
Following the significant changes to provisions on the cleansing of mixed funds made by the Finance (No. 2) Act 2017 STEP, along with CIOT, ICAEW and the Law Society, prepared a question and draft answer document to highlight areas of uncertainty in the legislation. The Q&A paper together with supporting documents, focusing on different areas of the legislation, was shared with HMRC and has now been published with their comments. The Q&A can be found here and links to Q&As on other Finance (No. 2) Act 2017 provisions can be found here.
2 October 2018: International - FATF draft Risk Based Approach Guidance to be discussed
FATF's Policy Development Group will discuss draft guidance relating to the organisation's Risk Based Approach for lawyers accountants and Trust and Company Service Providers (TCSPs) this month. STEP played a major role in the preparation of the TCSP guidance, which is expected to be published next year alongside the other guidance documents.
22 August 2018: UK - STEP scrutinises impact of the General Data Protection Regulation
Following the implementation of the EU's General Data Protection Regulation (GDPR) STEP formed a Data Protection Impact Group to review the GDPR’s effect on the trust and estate industry, collate the practical issues and submit them to the Information Commissioner’s Office (ICO). It is hoped the ICO will then be able to address any gaps in guidance or legislation. If you have any examples of how the GDPR is impacting your work please let us know via: [email protected].
4 July 2018: UK - DWP responds to STEP enquiry about statutory notices
STEP contacted the UK Department of Work and Pensions in March 2018, following queries from members, to ask whether the DWP is bound by statutory notices when it comes to making claims on an estate. The DWP has confirmed that it does not have any authority to dismiss the protection afforded to executors and trustees by the Trustee Act 1925, section 27. More information on the response can be found here.
29 June 2018: International - STEP publishes advice for members on how to respond to the OECD's Mandatory Disclosure Rules (MDRs)
Following the OECD's publication of their Model Mandatory Disclosure Rules (MDRs) to tackle CRS avoidance STEP made a number of resources available to help any members or branches wishing to respond to the implementation of the rules in their own jurisdictions. The information included STEP's original response to the consultation process, guidance on how to engage with policymakers and a media toolkit to assist members in communicating their messages more widely. The information can be found here and any members requiring further advice or help with engaging with policymakers are advised to email the Policy Team directly via [email protected].
12 June 2018: UK - HMRC provides updates on the future of the UK Trust Registration Service
STEP representatives attended a meeting with HM Revenue & Customs (HMRC) and HM Treasury (HMT) to discuss the current operation of the Trust Registration Service and its future following the EU's Fifth Anti-Money Laundering Directive. STEP's Technical Counsel has prepared a summary of the main points of the meeting which can be read in full here.
8 June 2018: UK - STEP submits evidence on tax avoidance involving profit fragmentation
The STEP UK Technical Committee produced a response (PDF 360KB) to a HM Revenue & Customs (HMRC) consultation, which is intended to inform proposals for the 2018-19 Finance Bill.
6 June 2018: UK - STEP responds to HMRC consultation on Capital Gains Tax
STEP's UK Technical Committe has provided a response (PDF 302KB) to a HM Revenue & Customs (HMRC) consultation regarding the introduction of a requirement to pay any capital gains tax due on the disposal of residential property within 30 days of the completion of the disposal.
1 June 2018: International - STEP Journal article - MDR: the story so far
In this article Simon Hodges, Director of Policy at STEP provides an overview of the debate surrounding the OECD’s incoming Mandatory Disclosure Rules.
31 May 2018: UK - STEP provides evidence to the UK's Treasury Sub-Committee
As part of its inquiry into tax avoidance and evasion the UK Parliament's Treasury Sub-Committee invited interested parties to provide written evidence. STEP's UK Technical Committee made a submission to the process. The full text of STEP's response can be found here.
14 May 2018: UK - STEP responds to HMRC consultation
STEP's UK Technical Committee has produced a response (PDF 326KB) the HM Revenue and Custom's consultation on the extension of offshore time limits for assessing tax in cases which involve offshore income, gains or chargeable transfers. The proposals were put forward by HMRC in anticipation of the UK's 2018-19 Finance Bill.
8 May 2018: UK - STEP responds to UK Treasury Committee inquiry on Economic Crime
STEP has submitted written evidence (PDF 310KB) to the UK Parliament's Treasury Committee as part of its Economic Crime inquiry. The response addresses the scale of money laundering in the UK, the effectiveness of the government's response to the issue and the role of professional bodies in the anti-money laundering regime.
30 April 2018: Bahamas - STEP Bahamas updates FATF Forum
The Financial Action Task Force's (FATF) Private Sector Consultative Forum included a number of sessions on Anti-Money Laundering and Counter Terrorist Financing. As part of one session the Chair of STEP Bahamas, Cecil Ferguson TEP was invited to report on the progress of the National Risk Assessment (NRA) in the jurisdiction. Cecil reported that following a collaborative process the Bahamas’ NRA had been adopted in December 2017 and was in the process of being implemented. More detials about the NRA and the process behind it can be found here.
22 March 2018: UK - HMRC responds to STEP query on the application of SDRT in relation to the TRS
HMRC has responded to STEP member Robin Vos TEP, Chair of the UK Technical Committee, regarding the application of stamp duty reserve tax (SDRT) in relation to the Trusts Registration Service (TRS), and examining the liability of the trustee. Read the HMRC response (PDF 315KB)
19 March 2018: International - STEP responds to OECD consultation
STEP's Public Policy Committee has sent a response (PDF 210KB) to the OECD's consultation process on preventing abuse of residence by investment schemes to circumvent the CRS. The response notes that the current approach would be too broad and outlines a more targeted scheme to help the OECD achieve its objectives more successfully.
9 March 2018: UK - STEP has been invited to join the Advisory Panel for the England & Wales Law Commission’s 'Making a Will' Consultation
STEP’s Technical Counsel Emily Deane TEP and member Stephen Lawson TEP have been invited to join an advisory group of academics, practitioners, members of the judiciary and others involved in this area as part of the England & Wales Law Commission’s 'Making a Will' Consultation. The purpose of this group is to discuss proposed policy, to consider any points arising out of the proposed recommendations and to provide expert advice and opinion on specific matters that may arise during the preparation of the final Report. In due course, they may also invite the advisory group to scrutinise the draft Bill that will be published with the report to implement the recommendations.
8 March 2018: International - STEP is co-chairing the focus group to re-write the FATF Risk Based Approach guidance for TCSPs
STEP’s Technical Counsel Emily Deane TEP and member John Riches TEP have been invited by the Financial Action Task Force (FATF) to join a working group to produce a risk based approach (RBA) guidance for professional intermediaries (lawyers, accountants and trusts and company service providers (TCSPs). STEP has been invited to co-chair the TCSP group and the guidance will be developed following the principle of public-private partnership. FATF have arranged representation from both the official and the private sectors, including professional associations and the composition of the groups will be approved by the FATF in its next Plenary in February 2018. STEP representatives will be attending the FATF Private Sector Consultative Forum in Vienna, Austria in April to discuss the draft guidance.
7 March 2018: UK - STEP has received a communication from UK HMRC outlining the penalties for late TRS registrations
STEP received a bulletin from HMRC on 5 March 2018 explaining the penalties that will be incurred for trusts that have not been registered by the 5 March deadline. HMRC extended the original 31 January deadline to 5 March due to teething problems with the registration service but it has been unknown what penalties trustees or agents would face if they failed to meet the deadline. HMRC has confirmed that it will take a 'pragmatic and risk based approach to charging penalties' for trust registrations made after this time, particularly in cases where it is clear that trustees or their agents have made reasonable efforts to meet their obligations under the regulations. Please see The STEP Blog for details of the penalties.