Trust and Estate Tax Returns: HMRC Targets Potential Trust Classification Errors
HMRC has recently launched a campaign aimed at trustees who may have incorrectly completed their most recent trust and estate tax return. The campaign focuses on trusts that were reported as not being accumulation & maintenance or discretionary trusts, where HMRC believes the trust's name suggests otherwise.
The classification of a trust is important because it can have a significant impact on the way in which it is taxed.
In its letter, HMRC acknowledges that the nature of a trust can change over time and that a trust's name alone does not determine its current status. However, trustees are being asked to review the position carefully and check that the trust has been correctly categorised on its tax return.
Trustees who receive a letter should review the trust deed, consider the current terms and operation of the trust, and determine whether the return submitted was accurate. Where an error is identified, corrective action should be taken promptly.
"The letters issued as part of this campaign specify a response deadline of 2 November 2026. Trustees who receive a letter should review their trust's position and, where necessary, seek professional advice as soon as possible to ensure any issues are addressed before the deadline.
If you have received one of these letters and would like assistance reviewing your trust's tax position, please contact our team. We can help determine the correct trust classification and advise on any amendments that may be required.
