Readers are advised that the 2009-10 Trust and Estate tax return contains a new feature - a tickbox to say whether a toolkit has been used in preparing the return. At present the toolkit is not available and HMRC have advised that the toolkit will not be published until mid-May. In this news item we explain about the toolkit and how it may be used, and also give details of a new dedicated HMRC helpline for agents dealing with trusts and estates.
We also reproduce - at the end of this item - the full text of a letter to the professional bodies from HMRC about these changes which are intended to provide support to agents involved in trust and estate work.
Pre-return support toolkits
HMRC has been developing a series of 'toolkits' which are designed to help agents preparing tax returns.
Each toolkit deals with a particular aspect of a tax return - for example, capital allowances on plant and machinery, or the treatment of personal/non-business expenditure. The toolkit literature takes the form of a checklist of potentially difficult or problematic issues, together with a more detailed explanation of each issue and a signpost to further information (generally to the HMRC manuals). The issues in the checklist are based on the HMRC's perception of risk - in other words, on the things that people frequently get wrong. The idea is to help people get returns right first time and so reduce the need for compliance work and save time and costs for everyone.
The first toolkits are due to come out in mid-May, and one of these deals with the 2009/10 Trust and Estate tax return.
There is no obligation to use a toolkit, and there are a variety of ways in which an agent might use one. One option would be to print off the checklist and work through it. But there is no need to do that; you might choose just to check that all the perceived risks are covered by your own tax return procedures. It is worth noting however that using a checklist may be seen as evidence of taking reasonable care in preparing a return, so it is important to keep a record of whether and how you have used the toolkits in your practice.
Professional bodies have been involved in developing the toolkits, and prototypes have been tested with agents preparing 2008/09 tax returns.
For the 2009/10 Trust and Estate return only, there is a tick-box to say if a toolkit has been used. This is so that HMRC can gather evidence of whether toolkits are used and if they make a difference - HMRC is putting a lot of resources into the toolkit project and needs data to assess the benefits and see how these products might be improved. However HMRC have stressed that the use or otherwise of a toolkit will not be part of their criteria in selecting a 2009/10 Trust and Estate return for enquiry. Furthermore, the answer to this question does not form part of the taxpayer's declaration that the return is complete and correct.
Agent dedicated line for trusts
HMRC is also introducing a new Agent Dedicated Line specifically for trusts enquiries. This will be launched in the summer. As well as offering help and support, HMRC will collect information from the calls to the new helpline, to identity areas where more guidance might be needed.
HMRC has also been discussing this development with professional bodies, and has made assurances that staff on the helpline will be able to handle the sort of questions agents might have.
The full text of the message from HMRC to professional bodies is as follows:
Changes in HMRC Trusts and Estates Practice
"We are making changes that we believe will improve the services and support we provide to agents dealing with Trusts and Estates. We hope that by working together, the changes do not cause problems on either side. Our aim is that, whilst working with the resources available to us, we can find ways to improve your access to our support and our interaction with agents. We also want to provide reassurance about an amendment we have made to the 2009-2010 Trusts & Estate SA 900 return that is linked to one of these changes.
New services for Trusts
Agent Dedicated Line
"This summer we will be introducing a new Agent Dedicated Line specifically for Trusts enquiries. The new service will be staffed to a high standard. It will assist us in identifying issues where we need to provide better clarification and help to ensure our guidance meets your needs. We will collect information about the nature and frequency of the enquiries we receive and share the most frequently asked questions and answers with the wider agent community.
"We also want to provide updates on issues that we believe will be of concern to agents and raise awareness of new developments on the Trusts and Estates front. As we learn more about how these elements are working, we will discuss with agent representatives how they might be developed and taken forward to benefit both the agent community and HMRC.
A new Toolkit for managing risks in the Trust & Estate Return
"This is part of a wider HMRC focus on ensuring correct returns are submitted rather than on compliance checks after an error has been made. The toolkit sets out the common errors we regularly see in Trust and Estate returns, and suggests steps that can be taken to reduce the risk of these errors being made. The new toolkit will incorporate the Capital Gains for Trusts toolkit we piloted with a small number of agents and take on board the lessons we learned from that trial. Use of this toolkit is entirely voluntary and will be available to all from mid-May 2010.
"We recognise that many of you already fully understand the issues the toolkit raises; however feedback from the pilot has shown that some practitioners welcome the assurance provided by the toolkit that their processes work, and that they can readily demonstrate reasonable care. Others have found one or two new points they were unaware of, and junior or inexperienced staff within practices have found the toolkit a helpful source of support. It should also be borne in mind that the toolkit will develop and change as we build upon our experience and if you identify issues that you think need addressing such feedback can help determine the future shape and usefulness of the toolkit.
Change to the 2009-10 Return - Toolkit tickbox
"The 2009-10 Trust & Estate Return includes a simple voluntary tickbox to indicate whether the toolkit has been used. We are aware this may be viewed with some concern by some agents and we want to reassure you that the tickbox will be used only to gather some basic data to show how widespread its use has been. Without this data it will be very difficult for us to assess the value of the toolkit, the extent it has been used, and how best to improve the support we offer. So if you do use the toolkit it will help us if you tick the box.
"The tickbox will not be used for risk assessment purposes in any way, nor will an empty box generate an enquiry. The notes to the return make it clear that the signatory bears no responsibility for the completion or non completion of this box so it will not and cannot be used as part of any challenge about the accuracy of a return.
"We take a flexible view on what "using" a toolkit means. There are many ways to use it and much
Some may want to work through the return checking off each box on the checklist.
Others will read the toolkit and be content that the risks it contains are understood and will be addressed appropriately should they arise.
It may mean checking the consistency of the firm's returns preparations systems with the toolkit (using either dedicated software or other measures).
The checklist is capable of being used in a free-standing way, but it is possible to use the toolkit without using the checklist.
"Tax calculations are often provided by fund managers or other intermediaries - using the toolkit does not require you to recheck their workings.
"We and representative bodies agree that a tickbox would be inappropriate on the wider SA return, it will only appear on the 2009-10 SA900 return. It will not reappear in later years unless there is agreement with professional bodies that a further data collection exercise would be useful.
"We welcome any feedback you may have on the toolkit or the agent dedicated line - please send any comments to kevin.beard@hmrc.gsi.gov.uk. Our helpline will be happy in due course to clarify any questions you may have about the toolkit and its use."