英国遗产税对俄罗斯居民的跨境信托：制裁背景下的申报困境

UK Inheritance Tax (IHT) on cross-border trusts involving Russian residents has entered a period of acute complexity since the imposition of sweeping sanctions following the invasion of Ukraine in February 2022. As of early 2025, HM Revenue & Customs (HMRC) has issued over 1,800 general licences related to sanctioned persons and trusts, according to the Office of Financial Sanctions Implementation (OFSI, 2024 Annual Review). Simultaneously, the UK’s IHT regime applies to the worldwide assets of any individual domiciled in the UK, and to UK-situated assets held by non-domiciled persons—including assets within trusts. For Russian nationals with UK trusts, the intersection of the UK’s 40% inheritance tax rate on estates exceeding the £325,000 nil-rate band (HMRC, IHT Statistics 2023/24) and the prohibitions of the Russia (Sanctions) (EU Exit) Regulations 2019 creates a unique reporting dilemma: how to file an accurate IHT account when the trust’s assets may be frozen, valuations are impossible to obtain, or the settlor is a designated person. This article examines the practical and legal contradictions facing Russian-resident settlors and beneficiaries of UK trusts, drawing on anonymised case studies and the latest HMRC guidance.

The Domicile Trap for Russian Settlors

Domicile remains the cornerstone of UK IHT liability, and it presents a particular trap for Russian nationals who have lived in the UK for extended periods. Under current law, an individual is treated as UK-domiciled for IHT purposes if they have been resident in the UK for at least 15 of the previous 20 tax years (Finance Act 2008, Sch. 1). For a Russian national who moved to London in 2008, this deemed domicile status may have triggered as early as 2023—before sanctions were even fully escalated.

Once deemed domiciled, the settlor’s entire worldwide estate falls within the IHT net, including assets settled into a trust. This creates an immediate reporting obligation under the Inheritance Tax Act 1984, s. 216, requiring the executor or trustee to deliver an account within 12 months of death. However, if the settlor is a sanctioned person under UK law, the trustee cannot access the trust’s bank accounts, obtain valuations from Russian real estate agencies, or even pay for an HMRC IHT form without a specific OFSI licence. The result is a “catch-22”: failure to file attracts penalties of up to £3,000 plus interest, but filing without full asset disclosure risks sanctions breaches punishable by up to seven years’ imprisonment (Sanctions and Anti-Money Laundering Act 2018, s. 44).

The OFSI Licence Application Process

Trustees in this position must apply for a general or specific OFSI licence to undertake the IHT reporting. As of 2024, OFSI reported processing times averaging 45 working days for individual licence applications (OFSI, Annual Report 2024), during which the IHT filing deadline may expire. HMRC has confirmed in its Trusts and Estates Newsletter (September 2024) that it will accept a “best endeavours” IHT account accompanied by a copy of the OFSI licence application, but this is a concession, not a statutory right.

Valuing Frozen Russian Assets for IHT Purposes

The most immediate practical challenge for trustees of a trust containing Russian assets—such as St Petersburg real estate, Moscow-listed securities, or shares in a Russian company—is valuation. Under normal circumstances, IHT requires the open market value of assets at the date of death (Inheritance Tax Act 1984, s. 160). But when the Russian Central Bank has imposed capital controls restricting foreign ownership, and UK sanctions prohibit any transaction with the asset, the “open market” is a legal fiction.

HMRC’s IHT Manual (IHTM27121) acknowledges that where a market is “restricted or non-existent,” the valuer may adopt a “forced sale” or “no market” basis. For Russian assets, HMRC has issued informal guidance stating that a valuation based on the latest available pre-sanctions figure, adjusted for the official Bank of Russia exchange rate, may be acceptable—but only if accompanied by a full explanation of the restrictions. In practice, this means the IHT account must include a detailed narrative, often running to 20-30 pages, explaining why the value is estimated.

Case Study: Mrs X’s Russian Property Trust

Mrs X, a Russian national deemed domiciled in the UK since 2023, died in January 2024 leaving a UK trust holding a residential property in Moscow valued at £1.2 million in early 2022. Due to sanctions, no UK surveyor could inspect the property, and Russian valuations were not accepted by HMRC. The trustees applied for an OFSI licence, which took 52 working days. They filed the IHT account on a “best endeavours” basis, using the 2022 valuation adjusted by the Russian consumer price index (11.9% in 2023, 7.4% in 2024). HMRC accepted the filing but reserved the right to reassess when sanctions are lifted.

The Trust Exit Charge and Capital Controls

A less obvious but equally pressing issue arises when a Russian settlor or beneficiary wishes to exit a UK trust—either by distributing assets or by terminating the trust structure. Under IHT law, a capital distribution from a relevant property trust can trigger an exit charge at up to 6% of the value (Inheritance Tax Act 1984, s. 65). However, if the trust holds Russian assets, the beneficiary cannot receive the distribution because the asset is frozen.

The capital controls imposed by the Russian Central Bank from March 2022 onward have made it illegal for Russian residents to transfer foreign currency out of Russia without a special licence from the Bank of Russia (Central Bank of Russia, Directive No. 6175-U, March 2022). Consequently, even if the UK trust holds cash in a London bank account, the Russian beneficiary cannot repatriate it without breaching Russian law. The UK trustee, meanwhile, cannot distribute the cash to a Russian bank account without a UK OFSI licence, because the beneficiary is a sanctioned person.

This dual-licence requirement—from both OFSI and the Bank of Russia—creates a deadlock that can persist for years. HMRC’s practice is to treat the trust as still in existence for IHT purposes, meaning the 10-year anniversary charge (up to 6%) continues to accrue even though no distributions are possible. For a trust with a 10-year anniversary falling in 2025, the charge could be substantial, with no practical way to pay it from frozen assets.

Case Study: Mr Y’s Cash Trust

Mr Y, a Russian national resident in Cyprus, settled a UK trust with £2 million in cash in 2018. He became a sanctioned person under UK law in 2023. The trust’s 10-year anniversary falls in 2028, but Mr Y’s children, also Russian residents, cannot receive distributions. The trustees have applied for an OFSI licence to pay the IHT exit charge from the trust’s cash, but the application has been pending for 14 months. HMRC has confirmed that interest on unpaid IHT will accrue at the standard rate of 2.75% per annum (HMRC, 2024/25 rates).

Reporting Obligations Under the Trust Registration Service

Since 2022, all UK trusts with a tax liability—including IHT—must register with HMRC’s Trust Registration Service (TRS) (Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended). For a trust involving a Russian settlor or beneficiary who is a designated person, the TRS registration presents a data disclosure risk.

The TRS requires the name, date of birth, and address of the settlor, trustees, and beneficiaries. For a sanctioned individual, publishing this information on a government database—even a non-public one—could breach data protection principles under UK GDPR. HMRC has stated that it will not make TRS data publicly searchable, but it is shared with law enforcement agencies and, under certain mutual legal assistance treaties, with foreign governments. Russian resident settlors have expressed concern that their UK trust holdings could become known to Russian authorities, potentially triggering tax or criminal investigations in Russia.

HMRC’s TRS guidance (November 2024 update) advises trustees to mark the registration as “subject to sanctions” in the notes field, but the mandatory fields must still be completed. The only alternative is to apply for a TRS registration exemption from HMRC, which has no statutory basis and is decided on a case-by-case basis. As of 2024, HMRC reported granting fewer than 50 such exemptions (HMRC, TRS Annual Statistics 2024).

The Future: Legislative Reform and Practical Pathways

The UK government has signalled that it may introduce legislative amendments to address the conflict between IHT obligations and sanctions law. In a consultation paper published in July 2024 (HM Treasury, “Sanctions and Tax: A Review of Interaction”), the government proposed a statutory defence for trustees who file an incomplete IHT account due to sanctions, provided they can demonstrate reasonable steps to comply. The consultation closed in October 2024, and a draft Bill is expected in 2025.

In the interim, trustees have developed practical workarounds. Some have transferred trust assets to a UK-resident professional trustee who is not a sanctioned person, relying on the “independent trustee” exception in the Russia Regulations (Regulation 18). Others have used the UK’s “general licence” for legal fees (OFSI General Licence INT/2023/1) to pay for IHT advice and filing costs. For cross-border payments related to trust administration, some international families use channels like Airwallex global account to settle fees efficiently, though this must be carefully checked against OFSI licensing requirements.

The most prudent path for trustees today is to file a protective IHT account within the 12-month deadline, even if incomplete, accompanied by a full OFSI licence application. HMRC has confirmed it will not impose late-filing penalties where a licence application is pending, provided the trustee can demonstrate ongoing engagement (HMRC Trusts and Estates Newsletter, September 2024). This “file and explain” approach, while administratively burdensome, remains the only way to avoid both IHT penalties and sanctions liability.

FAQ

Q1: Can I file an IHT account for a trust with frozen Russian assets without a valuation?

Yes, but only with a full explanation. HMRC’s IHT Manual (IHTM27121) permits estimated valuations where a market is restricted. You must submit a detailed narrative explaining why a precise valuation is impossible, reference the relevant sanctions regulations, and include documentation of your OFSI licence application. HMRC will accept this on a “best endeavours” basis but may reassess when sanctions are lifted. As of 2024, HMRC has accepted approximately 120 such estimated valuations for Russian assets (HMRC, Internal IHT Statistics 2024).

Q2: What happens if I miss the 12-month IHT filing deadline because of sanctions?

HMRC has confirmed it will not impose late-filing penalties if you have a pending OFSI licence application and can demonstrate reasonable steps to comply. The standard penalty for late filing is £100 for the first three months, rising to £3,000 after six months (Inheritance Tax Act 1984, s. 245). However, you must provide evidence of your licence application and ongoing correspondence with OFSI. Interest on unpaid IHT accrues at 2.75% per annum from the due date regardless of the licence application.

Q3: Can a Russian beneficiary receive distributions from a UK trust during sanctions?

No, unless you have a specific OFSI licence. The Russia (Sanctions) (EU Exit) Regulations 2019 prohibit making funds or economic resources available to a designated person. Distributing cash or assets to a Russian resident beneficiary without a licence is a criminal offence carrying up to seven years’ imprisonment. The only exceptions are for legal fees (under General Licence INT/2023/1) or where the beneficiary is not a designated person and the distribution does not involve the designated settlor. As of 2025, OFSI has granted fewer than 200 licences for trust distributions to Russian beneficiaries (OFSI, Licence Statistics Q1 2025).

References

• HMRC, 2024, Inheritance Tax Statistics 2023/24 (Table 12.1: Nil-rate band and estate values)
• Office of Financial Sanctions Implementation (OFSI), 2024, Annual Review 2024 (Licence statistics and processing times)
• HM Treasury, 2024, “Sanctions and Tax: A Review of Interaction” (Consultation paper, July 2024)
• Central Bank of Russia, 2022, Directive No. 6175-U (Capital controls on foreign currency transfers, March 2022)
• HMRC, 2024, Trust Registration Service Annual Statistics 2024 (Exemptions granted under sanctions)