Deloitte conferences focus on trust and tax

Thursday 05 March 2020

Trust and tax matters were put under the spotlight at Deloitte's first International Trust Tax Conferences which took place last week in both Guernsey and Jersey.

The conferences focussed on three jurisdictions that frequently raise issues for local trustees - France, the USA and the UK.

Orianne Acheriteguy, Partner, and, Sarah Gabaly, Manager, from Deloitte’s Paris office took the audience through the development of France’s approach to trusts following the introduction of specific trust legislation in 2011. They explained the reporting requirements for trusts, including the latest anti-money laundering ordinance introduced only this month. This includes a requirement to now disclose details of the Protector in trust returns.

Chris Horton, Partner, and Svetlana Ivaniuk, Associate Director, from Deloitte’s London US/UK High-Net-Worth team, covered some of the challenges and openings recent US tax reform has brought for trustees and issues that non-US trusts with US beneficiaries or US assets faced in 2019. These included benefits around the enhanced gift and estate exclusion for US persons, challenges faced in connection with the new rules introduced for controlled foreign corporations, complexities of US income re-classification for UK tax purposes, giving up of US citizenship or a green card, US tax issues faced by trustees on death of the settlor, overview of current IRS programmes and campaigns and the impact of estate tax treaties as well as state tax considerations.

Matthew Maltby, Associate Director, and Alison Hill, Consultant, from Deloitte’s Guernsey office looked at the areas of UK tax reporting where they see most issues arising for Channel Island trustees.  This included income tax and inheritance tax reporting and lessons learnt from HMRC’s Requirement to Correct (RTC) initiative, under which previously undeclared tax liabilities were disclosed – the key takeaway that if UK reporting is now up to date as a result of the RTC, ensure it is kept up to date to avoid HMRC’s punitive penalty regime.

Deloitte pensions experts Chris Bulleyment, Partner, and Varinder Allen, Associate Director, explained the complex taxation position of distributions from Channel Island-based pension plans.  Their discussion considered the tax regimes applicable in the location where a pension scheme member has accrued their benefits, and the regimes applying in a number of popular retirement destinations. 

The pair also discussed how the application of double tax treaties determines if and how taxing rights are allocated to one location or another in the case of pensions and lump sum payments and that in some cases, the UK is willing to give up taxing rights to non-tax jurisdictions, where information exchange agreements are in place.

The presenters came together to discuss a case study involving a trust structure with touch-points across the UK, US and France. The panel brought out some of the straightforward and the complex tax considerations, with the USA and the Pensions teams highlighting the complexities that arose in a live joint project with overlapping considerations and advice. The even more complex issues around providing cohesive, one-stop shop, multi-jurisdictional advice became readily apparent.

Alison Vine, Director Deloitte Guernsey commented, “The event shone a spotlight on the very many and very complex tax matters that trustees often face. Deloitte’s global reach and access to a worldwide network of tax professionals, gives us the ability to deliver multi-jurisdictional advice seamlessly to clients through a single point of contact.”