Tax Titbits has been in lockdown (and non-coronavirus tax news seems to have been in relatively limited supply) but with restrictions easing it now returns and Rawlinson & Hunter will continue to provide you with monthly updates on important tax developments in the private client world.
Legislation to reverse the Barclays Wealth Trustees decision will come into force when Finance Bill 2020 receives Royal Assent. No changes have been made to the draft clauses published last year. Excluded property status will be lost, with retrospective effect, if property has been added to a trust, or transferred between two trusts, at a time when the settlor has become deemed UK domiciled, or actually UK domiciled under general law. If the settlor has an interest in the trust, loss of excluded property status will result in a potential IHT charge on trust assets on his death, under the gift with reservation of benefit provisions.
Rishi Sunak has asked the Office of Tax Simplification to review the CGT regime for individuals and small businesses (that is, excluding corporates). The outcome of the review could be far reaching, and tax rates may increase. An online survey requesting comments has been published.
It is not uncommon for advisers to find themselves with a client who has done something before taking advice and then is distraught to find that their action may have triggered a tax liability because (for example) it has resulted in a potential disposal for CGT purposes. In such cases, an adviser will obviously look for “get out of jail” cards and often consider, in the case of CGT, if there is a possibility that there was not a disposal on the basis the recipient was holding the asset as a bare trustee for the tax payer. This will normally be a difficult position to maintain, as proved to be the position in the recent case of Bhikhi vs HMRC TC 7728. The point was, however, considered in depth in that case, and this will be a useful judgment to consult the next time you face this position in practice (which you surely will).
Trust Registration and the Fifth Ant...