IPTM9230 | Overseas insurers: reporting duties: policies held on trust

Trustees hold the policy

Where a policy is held in trust, the trustees would in most cases be the policyholder. A trust is a single continuing body for tax purposes and so the trustees are treated as a single policyholder.

Where an overseas insurer or tax representative must send a chargeable event certificate or information notice to HMRC, it should enter on the certificate or notice the name and address of the trustee that has been designated to receive correspondence. If there is no such designated trustee then the insurer should include the names and addresses of all the trustees.

Where it must send a chargeable event certificate to the policyholder, it should send a certificate to the first named trustee, or to any trustee for which it holds an address.

Whether trustees are UK resident

Insurers and tax representatives are only required to report events on ‘relevant insurances’ - see IPTM9030.

A policy will only be a relevant insurance if the policyholder is resident in the UK so where the policyholders are trustees it is necessary to know whether the trustees, when regarded as a single body, should be treated as UK resident.

If all or none of the trustees are resident in the UK then the trustees must be treated as UK resident or not as appropriate. But where the residence of the trustees is mixed, some UK resident and some not, the position is less straightforward.

Then the trustees are treated as UK resident if the settlor of the trust was resident or ordinarily resident or domiciled in the UK when he or she created the trust or provided funds for it. This is not necessarily information that an insurer or tax representative will hold and it is not expected to take steps to obtain it. An insurer should act on the basis of information in its possession. Where it knows that at least one of the trustees is UK resident, it should treat the trustees as being UK resident, unless it has information to suggest otherwise, and report events on the policy to the trustees and HMRC where required.

Chargeable person

Occasionally trustees will be chargeable to tax on any gains arising on the policy, although it is more likely that settlor of the trust is liable. However, in operating the chargeable event reporting rules an overseas insurer or tax representative does not need to know who the liable person is, since the rules only require that information is provided about, and to, policyholders. Insurers do not need to establish the identities of the beneficiaries or settlors of the trust.