Book review: Tax Advisers’ Guide to Trusts

 In Book Reviews for Private Client practitioners, Trusts

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Tax Advisers’ Guide to Trusts – 5th Edition, Bloomsbury

There are many different professionals involved in the creation and management of trusts and the assets they hold: lawyers, accountants, Bankers, wealth managers etc. This book, in its 5th Edition, is aimed at tax advisers who may feel “uncomfortable” with the concept of trusts. It runs to over 700 pages before the copious Appendices and therefore is a significant text which states the law as at 31 December 2015. Book review

Given its target audience is tax practitioners the Appendices include extracts from major trust legislation which might not be as accessible to tax practitioners as taxing statues.

Purpose

The stated aim of the authors in writing this book “is to try to demystify the subject and explain the tax rules and the way in which trusts can be used in practice as a flexible and effective means of wealth accumulation and protection in an uncertain world.”

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Content

The text is divided across 19 chapters and 9 Appendices to provide comprehensive coverage.

Chapter 1 puts the nature of a trust under the microscope comparing it with other structures and clarifying what makes a valid trust.

Chapter 2 examines some of the main legislation governing trusts with the exception of the Trusts of Land & Appointment of Trustees Act 1996 to which a special chapter – 17 – is devoted.

Chapter 3 explores the formalities around making trusts and matters affecting trusts such as letters of wishes and perpetuities and accumulations.

Chapter 4 examines the power and duties of trustees which is vital to the practitioner’s understanding of what actions particular trusts might take to keep the trust current and flexible.

In the light of recent concerns about tax transparency, or lack of it, in relation to offshore funds Chapter 5 shines the spotlight on the tax residency and domicile of individuals, companies and trusts.

Chapter 6 summarises the income tax, capital gains tax and inheritance tax treatment of trusts in general before Chapters 7-13 looks at specific types of trust and their tax treatment e.g. Chapter 8 deals with bare trusts; Chapter 11 considers charitable trusts.

Chapter 14 explains Asset Protection Trusts. Interestingly, this is an example of where who the book is aimed at is important. An ‘elderly client’ practitioner would be expecting a chapter with this title to include issues around care fee funding and the issues around deprivation of assets. In fact, given the book’s target audience of tax advisers, we are told about the use of trusts to protect against insolvency instead.

Chapter 15 examines Will trusts from the perspective of the transition from estate administration to trust management – an area which is often difficult to master in practice.

Chapter 16 looks at Employee Benefit Trusts and Chapter 18, pension funds. Chapter 19 winds up the text with guidance on how to deal with HMRC and produce the trust tax return.

Structure & Layout

The style of the book uses chapters divided by numbered paragraphs for ease of research. It makes for a dense narrative but aims at comprehensiveness rather than crisp concepts, diagrams and bullet points, which would have made it easier to read and comprehend.

Tools

Evidence of the fact that there are three authors is perhaps found in the lack of scenarios and worked examples in the law chapters by comparison to the examples in the tax chapters such as chapter 6 and chapter 19, which aid understanding.

It is a little surprising that a few glitches slipped through such as reference on page 143 to the STEP Standard Provisions 1st Edition and how to incorporate those with changes because of developments in the law rather than an examination of the 2nd Edition and how it differs in content and approach from the 1st Edition. This is despite the fact that Appendix 7 contains both the 1st and 2nd Editions of the provisions.

There is an absence of checklists or practical tips for dealing with the administration of trusts or collecting appropriate data for things like compliance matters such as FATCA.

Clarity & readability

This is a book one would turn to for research purposes rather than reading copious chapters at one sitting. As such, finding a clear answer to a query is definitely possible although one is tempted to say the Google generation may never open it; its size and scale being potentially off-putting.

Relevance to practitioners

By its own admission it assumes readers will be familiar with general tax rules relating to the computation of income and gains for self-assessment. It is after all a text aimed at tax practitioners rather than lawyers. It is therefore of relevance to the more experienced practitioner who might struggle in part with some aspects of trust law rather than the trust lawyer trying to get to grips with basic trust accounts and taxation.

In a competitive market for tools to help the practitioner some on-line publications might be preferable but it has a place for its target market, albeit at a price of £130.00.

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