HMRC makes it clear that a record of trust income and expenses must be kept to complete the trust and estate tax return and pass information to beneficiaries.
How long should records be kept?
If the self-assessment tax return is submitted on or before January 31, HMRC states that records should be retained for one more year from January 31. For example, for a 2020-21 self-assessment tax return filed on or before January 31 2022, records must be kept until January 31 2023.
However, the retention period suggested by HMRC seems a little short as it relates to tax requirements only. It is best to retain documentation for as long as possible.
The legal responsibility for registration, where appropriate, with the Trust Registration Service, lies with the trustees.
Distributing property to beneficiaries
This a duty that rests firmly with the trustees and cannot be allocated to a third party, although of course advice can be taken before making distributions. The terms of the trust must be followed and all trustees will need to be in agreement.
Richard Cooper is business development manager at the London Institute of Banking & Finance
