Book review

When the first edition of the STEP Accounting Guidelines was published in 2005, I thought it was exactly what the trusts and estates profession required. The guidelines offered clear and concise explanations for preparing trusts and estates accounts, with template examples of the estates inheritance tax returns, estates accounts and differing types of trusts accounts.

As an accountant, I had been dismayed by the variety and quality of paperwork being produced before then that purported to be trusts and estates accounts.

Moving forward, the second edition of the guidelines builds on the foundations of the first edition, but takes on a much more educational and informative role. This is particularly evident in chapter 2, which runs through the double-entry bookkeeping system at some length and introduces the concept of an extended trial balance, which some practitioners, particularly non-accountants working in the legal profession, may find useful.

The distinction between income and capital, which can, at least initially, be a difficult concept for students and trainees to grasp, is covered in chapter 3. It is essential to get this right.

There is also a useful summary of the contentious area of the correct apportionment of professional fees and accountancy fees between income and capital, which is particularly helpful. The accrued income scheme – another problematic topic as it is capital that is taxed as income – is explained clearly.

However, my one quibble on the accrued income section is that clarity about the year in which the accrued income is taxed or relieved would have been helpful. This is because in some instances the fixed interest investment, subject to accrued income, is bought in one tax year, say 2012/13, but the charge or relief will attach itself to the next interest receipt, say, 2013/14. On that basis the charge or relief applies to the later year.

Where the second edition really differs from the first is by moving all of the appendices containing the examples online. This has created more space in the hard copy to include four new chapters covering accounting principles, relevant property trusts, trusts for children and a very useful chapter
on trusts distribution accounts.

In addition, transferring material online means six appendices have become 24, covering some 192 pages. These include, as previously, examples of standard estates accounts and accounts for different types of trusts, and now show the detailed working papers required for the accounts to be produced, the trusts tax returns, and the trusts and estates income certificates, forms R185.

When the guidelines are followed, I believe that the quality of information produced and provided to executors, trustees and beneficiaries will be greatly enhanced, which helps the whole profession.

Overall, this is an excellent enhancement of the original edition. It is suitable for practitioners at all stages of their careers, notably students and trainees, who will find the pro-forma examples, coupled with the explanatory text, invaluable.

I would therefore recommend this as an essential addition to all practitioners’ bookshelves, especially at the very reasonable price of £35 for STEP members and £45 for non-members.

Gary Hicks is head of trusts and estates at Reeves

ISBN: 978 0 9550262 5  Publisher: STEP and CLT International  RRP: £35 / £45  Published: 2013