• General Information
• The Return Form
• Meaning of Settlement, Settlor and Non-Resident Trustee
• Meaning of “concerned with the making of a settlement”
• Meaning of “knows or has reason to believe”
• Meaning of “making of a settlement”
• Territorial Scope of the Reporting Obligation
• Scope of Information Required
• Multiple Returns
• Will Trusts, Trusts created on Intestacy and Bare Trusts involving minors

General Information

The legislation at section 896A of the Taxes Consolidation Act 1997 requires information returns to be made to Revenue by a person, who in the course of carrying on a trade or profession, has been concerned with the making of a settlement and knows or has reason to believe that, at the time of the making of the settlement —

1. the settlor was resident or ordinarily resident in the State, and
2. the trustees of the settlement were not resident in the State.

The information to be returned to Revenue is the names and addresses of the Irish resident or ordinarily resident settlors, the non-resident trustees and the dates of the settlements.

The Return Form

What is the name of the return form and can the return be made electronically?

The return form is titled “Form 8-S” and the form can be sent electronically by secure email to specialprojects@revenue.ie. Information on how to register for secure email is available at: http://www.revenue.ie/en/practitioner/secure-email.html. Alternatively, the Form 8-S may be posted to: Office of the Revenue Commissioners, Special Projects Team, 5th Floor, Lansdowne House, Lansdowne Road, Ballsbridge, Dublin 4.

Time Limits

The time limits for making a return to Revenue are:

• in the case of a settlement made in the period between 24 December 2003 and 30 April 2009, the return is due on or before 1 September 2009
• in the case of a settlement made on or after 1 May 2009, the return is due within 4 months of the date of the making of the settlement.

Meaning of Settlement, Settlor and Non-Resident Trustee

What is meant by the term “settlement”?

The meaning of “settlement” is set out in section 10 of the Taxes Consolidation Act 1997 and includes any disposition, trust, covenant, agreement or arrangement, and any transfer of money or other property or of any right to money or other property.

What categories of persons are required to send information returns to Revenue?

The categories of persons within the scope of the reporting requirements include, but are not limited to, solicitors, accountants, financial institutions, financial intermediaries, financial advisers, tax practitioners, trust service providers and companies.

The responsibility for making the return under section 896A rests with the sole practitioner / trader and in the case of partnerships, with the precedent acting partner and in the case of financial institutions, companies etc, with the secretary.

What does the term “settlor” refer to?

The term settlor means any person by whom the settlement was made. A person is deemed to have made a settlement if the person has made or entered into the settlement directly or indirectly and, in particular (but without prejudice to the generality of the preceding words), if the person has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

When is a trustee regarded as not resident in the State?

A trustee is regarded as not resident in the State unless the general administration of the settlement is ordinarily carried on in the State and the trustees or a majority of each class of trustees are for the time being resident in the State.

Meaning of “Concerned with the Making of a Settlement”

What is meant by person “concerned with the making of a settlement”?

A person “concerned with the making of a settlement” would include any Third Party who:

• is engaged or involved in the making of the settlement
• facilitates or arranges the making of the settlement
• provides services to or for a settlor or trustee in the making of the settlement
• is involved in or arranges the transmission of funds in relation to the settlement.

An adviser provided financial advice to a client in relation to the settlement of funds on an offshore trust and arranged the transfer of the monies to the trustees in June 2004. What are the reporting obligations?

The adviser is required to provide a return under section 896A to Revenue setting out the names and addresses of the settlors and the non-resident trustees and the date of the settlement.

If a tax practitioner gives preliminary general advice on tax issues regarding offshore trust matters but there is no specific client in mind and no involvement with a settlor or trustee, is the tax practitioner regarded as a person who is “concerned with the making of a settlement”?

Where the advice provided is generic and not specific to a client or trustee there is no reporting obligation under section 896A.

Preliminary advice [e.g. tax, trust, legal, financial or accounting] has been given by an adviser on a proposed settlement by a client. What are the reporting requirements?

Where an adviser gives advice in relation to a proposed settlement by a client and the proposed settlement is subsequently made or created the adviser has been “concerned with the making of a settlement”. If the adviser knows that the settlement has been made and also knows or has reason to believe that, at the time of the making of the settlement, the settlor was resident or ordinarily resident in the State and the trustees were not resident in the State the adviser has a reporting obligation under section 896A. Having regard to their professional relationships with clients, including statutory obligations, advisers would normally be expected to know if a settlement had been made. However, if the adviser does not know that a settlement has been made he does not have a reporting obligation.

Where the adviser has given preliminary advice on a proposed settlement but only finds out after the Third Party reporting time limit has elapsed that a settlement has been made, is there a reporting requirement?

In circumstances where the adviser, having regard to their professional relationships with clients, including statutory obligations, only becomes aware after the reporting time limit has elapsed that a settlement was made then there is no reporting requirement under section 896A.

What if the adviser, who has given preliminary advice on a proposed settlement, finds out just before the deadline for making a Third Party return that a settlement was actually made – will additional time be allowed to deliver a return to Revenue?

Where an adviser is unable to meet the deadline for making a section 896A return due to only becoming aware close to the deadline that a settlement was made, then a report made within 1 month of the deadline will be regarded as satisfying the reporting time limit requirement. This approach will, in effect, apply to current/future settlements [as the time limit for delivery of section 896A returns has been extended to 1 September 2009 for settlements made between 24 December 2003 and 30 April 2009].

Is there a requirement to report under section 896A where a Firm is approached now, in the light of the current Revenue Qualifying Disclosure Initiative, to advise on the tax consequences of a settlement established in, say, 2004, but the Firm had no earlier involvement or knowledge in regard to the making of the settlement?

Where a settlement is established and the settlor approaches a Firm, which was not concerned with the making of the settlement at the time, after the settlement was made to advise on the tax consequences of that settlement then there is no section 896A reporting obligation on the Firm.

With CREST a broker acting for a purchaser may hold shares in a nominee account for clearing and ease of transfer of the shares – are share transactions involving the use of a broker's non-resident nominee account in this manner required to be returned under section 896A?

The use of a broker's non-resident nominee account within CREST for the purpose of simply clearing, and ease of transfer, of shares which were purchased for an investor would not, in itself, be regarded as requiring a return under section 896A.

Irish residents make a pension fund investment in a UK property but the UK property is acquired in the name of a nominee for administrative purposes – is a section 896A return required?

A section 896A return is not required in respect of the pension fund investment where the property is acquired in the name of a nominee for administrative purposes.

In a BES fund the BES investors’ interests are often held by a single nominee so that a single signature is required rather than dealing directly with each investor – would a return be required under s896A?

No. A section 896A return would not be required in circumstances where a nominee has been used to hold the interests of BES investors.

An employer arranges the establishment of an offshore trust structure in 2004 for the benefit of its employees. The employer transfers or settles funds or assets on the structure and the employees have an entitlement to disbursements out of the trust. Does the employer have a reporting obligation under the provisions of section 896A in respect of the establishment of the trust structure and the settlement of funds / assets?

Yes. The establishment of the trust structure and the transfer or settlement of funds and assets on the structure come within the scope of the section 896A reporting requirements and the employer is required to deliver returns.

Where a solicitor reviews a draft trust deed and arranges the establishment of the trust, is this within the meaning of “concerned with the making of a settlement”?

Yes. The solicitor has arranged the making of the settlement for the settlor and a return is required.

Where a bank operates an account which is held in the name of non-resident trustees and which is subject to the terms of a trust, is the bank “concerned with the making of a settlement”?

Yes. The term “settlement” is widely defined in section 10 of the Taxes Consolidation Act 1997 and covers a transfer of money. The legislation does not simply cover the first transfer when a trust is set up – it also covers a transfer to an existing trust or transfer by trustees of funds from one bank account to another.

Also, where non-resident trustees are changing bank accounts and transferring funds from one bank account to another this would constitute the making of a settlement and would be reportable.

A bank arranges the settlement of funds for a customer on an existing non-resident trust – is the transfer of funds reportable?

Yes. The meaning of “settlement” includes any transfer of money and the reporting obligation applies.

A financial adviser arranges the transmission of funds to a non-resident nominee trust for a client – is this subject to the reporting requirements?

Yes. The transmission of funds to the non-resident trust comes within the terms of the reporting requirements.

An accountant arranges the transfer of assets to a non-resident bare trust on behalf of a client – is a return required?

Yes. The transfer comes within the meaning of “settlement” and section 896A applies.

A management services company transfers stocks or shares to a non-resident nominee company which in turn holds the assets in a custodial or fiduciary capacity – is the company required to make a return?

Yes. The non-resident nominee company is acting as non-resident trustee and the transfer comes within the meaning of “settlement”.

A financial intermediary operates a portfolio account which is held in the name of a non-resident entity acting in a nominee or custodial capacity but the funding of the account is provided indirectly by an Irish resident person – what is the reporting requirement?

The non-resident entity is acting in a trustee capacity and the meaning of settlor includes a person who provides or undertakes to provide funds directly or indirectly for the purpose of the settlement – the financial intermediary is required to make a return.

Meaning of “Knows or Has Reason to Believe”

How will an accountant, bank, solicitor etc “know or have reason to believe” that the settlor is resident or ordinarily resident in the State and that the trustee is not resident in the State?

A Third Party [such as, an accountant, bank, solicitor etc] would normally know the residence position of a settlor and trustee from the “know your client” checks carried out – either from the client details maintained by the firm etc or from the information shown on the face of the documentation e.g. deed, banking information, correspondence, particulars provided by client / customer in the course of providing the service.

The Third Party is required to provide the information which became available in the normal course of providing the service, advice etc or in carrying on the business or profession. The legislation also requires a return to be made where there is “reason to believe” that the settlor was Irish resident or ordinarily resident or that the trustee was non-resident. The Third Party is not required to embark on a fact-finding mission where the residence position is not known or the Third Party concerned has no reason to believe that the settlor was Irish resident or ordinarily resident or that the trustee was non-resident.

Meaning of “Making of a Settlement”

Where there is an existing trust and the settlor makes a second contribution of money into the trust, does this contribution constitute the “making of a settlement”?

Yes. The term “settlement” is widely defined and includes “any transfer of money”.

Would a contribution of money by a separate donor [not being the original donor] into an existing trust constitute the “making of a settlement”?

Yes. The separate donor is regarded as a settlor and the contribution would be regarded as a settlement within the meaning of section 10 of the Taxes Consolidation Act, 1997.

Where a trust was established some 15 years ago & further monies are transferred into the trust in 2004, 2006 and 2008 – do each of these transfers of monies constitute the making of a settlement?

Yes. Each of these transfers of monies made in 2004, 2006 and 2008 constitute the “making of a settlement”.

Where a disposition to an existing trust (not requiring any new trust deed or new trustees) is made, is this regarded as the “making of a settlement”?

Yes. A disposition to an existing trust will be a settlement – the term “settlement “is widely defined in section 10 of the Taxes Consolidation Act 1997 and includes a disposition.

Are donations to foreign charities (operating as trusts) within the reporting obligation?

Donations to foreign charities will be within the reporting obligation. However, where there is a bona fide transfer to a public charity with no element of personal benefit to the settlor or his family there would be no requirement to report.

Territorial Scope of the Reporting Obligation

Is the reporting obligation applicable only to persons resident in, or with an establishment in, the State. Should non-resident solicitors, accountants, financial institutions etc., establish reporting procedures?

The legislation does not have a territorial limit and it applies to persons who carry on a trade or profession either in the State or outside the State. The section 896A returns should be made to Revenue's Special Projects Team.

Scope of Information Required

If a tax practitioner provides advice for a settlor on the tax or financial issues that will arise for the settlement but the practitioner does not know the names and addresses of the non-resident trustees or the actual date that the settlement was created, what is the statutory obligation?

The tax practitioner is only expected to include the information which has been obtained in the normal course of providing the advice to the settlor – in the situation above, the return requirements would be satisfied by providing the name and address of the settlor.

If a solicitor provides advice to a settlor in relation to a settlement which is to be located and governed by the law of another jurisdiction and the solicitor refers the matter on to a lawyer based in that jurisdiction for the purpose of creating the trust but does not see the final deed and does not know the actual date of the settlement-what is the reporting obligation?

The obligation is to report the information obtained in the normal course of business in providing the advice to the settlor. Where the solicitor does not have all the information required then the return should provide the information that is available – in the above situation, the return should provide the name and address of the settlor.

Multiple Returns

In a situation where there is a large number of advisors involved (e.g. a solicitor who drafts a trust, an accountant who deals with funds transferred and a trust service provider), is a report required from each of the three Third Parties?.

Yes. The reporting obligation applies to each of the three Third Parties.

Where the making of the settlement was required to be reported by, say, a disponer under the disponer's obligation under CAT legislation to report the creation of a discretionary trust, is there an obligation on the Third Party to provide the information under section 896A?

Yes. There is an obligation on the Third Party to provide the information under section 896A notwithstanding any separate return requirements to be made by disponers, transferors or settlors.

Will Trusts, Trusts Created on Intestacy and Bare Trusts Involving Minors

What is the reporting obligation in relation to a trust provided for under a Will:

• where a solicitor drafts a Will trust and the client simply takes the Will from the office and the Will takes no effect until the death of the client – such a Will can be replaced at any time and the solicitor may never know when the client dies, or
• where the solicitor holds a Will but does not know that the client has revoked the Will and drafted a new Will, and does not know the terms – in particular, whether the trust was carried forward into the new Will – and while the solicitor becomes aware of the client's death he does not know if the Will trust came into existence.

What is the date on which the settlement is treated as having been made?

The reporting obligation would cover any inter vivos trust that may be set up at the time a Will is drawn up.

The reporting obligation would only arise in relation to the Will when any Will trust comes into existence.

If an executor is required to set up the trust as a result of the Will or an adviser is involved in steps taken to make or implement a settlement which is a Will trust there will be a reporting obligation.

In relation to a trust created on Intestacy or under a Will where the administrator, executor or trustees is / are non-resident but full details of the estate and trust have been provided to Revenue on the Inland Revenue Affidavit, Form CA24, would a section 896A return be required?

A trust created on Intestacy or under a Will involving a non-resident administrator, executor or trustees need not be returned under section 896A where full details of the estate and trust have been provided to Revenue on the Inland Revenue Affidavit, Form CA24.

Where a Bare Trust (Settled Land Act Trust) is used to hold assets for minors, who legally cannot hold title although they can be the beneficial owners, is a return under s896A required? Also, would a return be required where a family set up an investment partnership and the interests of minor family members are held by nominees?

Where the bare trustees / nominees holding the assets and interests for a minor are family members [as distinct from a non-resident firm or entity acting in a professional bare trustee / nominee capacity) then a return need not be provided. A section 896A return would, however, be required if a professional non-resident firm or entity has acted as bare trustee / nominee.

Source: Revenue Website http://www.revenue.ie

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