Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what reports he has received on the extent of the use of trusts as tax avoidance vehicles; and what steps he is taking to tackle that use of trusts.

While most trusts are used legitimately, some people use them in an attempt to avoid or evade tax. HMRC review and challenge these arrangements as part of their risk based compliance strategy.

Of the avoidance schemes disclosed under the Disclosure of Tax Avoidance Scheme (DOTAS) regime since 2014, analysis at the point of disclosure indicates that around a third of them include trusts. However, the use of a trust may not be a material component of the scheme. The exact use of a trust will in many cases only become clear on further investigation.

Recent reforms have increased the tax transparency of trusts. These include international information exchange under the Common Reporting Standard (which includes financial accounts relevant to trusts) and a UK requirement that all trusts with a UK tax liability must register with HMRC’s Trust Registration Service.