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Attention all Trustees – HMRC Trust Registration Service (TRS)
The UK Trust Registration Service (TRS) came into being in 2017 as part of the UK implementing an EU anti-money laundering directive.
The TRS requires the full details of the beneficial owners (i.e., the Settlor(s), the Trustees and the Beneficiaries) of a trust.
In general terms, the aim of the TRS is give more transparency about Trusts and compliance and is designed to provide a single point of access for Trustees and their agents to register Trusts and once registered, update any changes to their details online with HM Revenue and Customs.
When the TRS was introduced, only trusts that incurred a UK tax liability (Income Tax, Capital Gains Tax, Inheritance Tax etc.) during any given tax year were required to register with the TRS.
The requirement to register a trust with the TRS is to be widened to include all ‘express trusts’, regardless of whether they have a UK tax liability. The deadline for Trustees to register an express trust is 1 September 2022.
Trustees have an ongoing responsibility to not only register with the TRS but also submit an annual declaration.
The TRS will not be open to the public, only to those with an interest such as legitimate organisations such as UK law enforcement authorities to prevent money-laundering.
- All UK express trusts
An express trust is created deliberately by a Settlor (i.e., the person who creates the trust), often by way of a deed or declaration during a Settlor’s lifetime or to take effect on death.
Some express trusts are exempt, and some examples are set out below.
Trustees would need to establish if the express trust is a taxpaying or non-taxpaying trust and register it as such. A taxpaying trust means it is liable to pay certain types of tax (e.g. Income Tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax and others).
Certain non-taxpaying UK express trusts are now required to be registered with the TRS whereas they didn’t before. It is important to know which type of trust you have and seek advice on whether it requires registration.
- Registrable taxable trusts
The data sharing requirements differ slightly from a registrable express trust above and a registrable taxable trust. For a taxable trust, more information regarding the assets will be required and where a trust is a registrable express trust, more information about the beneficial owners will be required.
- All non-taxable UK Trusts and some non-UK trusts
Non-UK trusts are required to register if they have links to the UK e.g. a UK tax liability.
Non-taxable UK trusts must register with the TRS unless they are excluded (see below).
- Non-UK non-taxpaying express trusts
You only have to register these if they directly acquire land or property in the UK after 6 October 2020 or have at least one Trustee resident in the UK and enter into a business relationship with an entity in the UK such as a professional adviser.
Who is affected?
There are some excluded express trusts and you should seek advice prior to commencing the registration process if you are unsure whether your trust needs to be registered.
Excluded trusts include (but are not limited to):-
- Legislative trusts (e.g. a trust set up under the intestacy rules or jointly owned assets such as the family home or a joint bank account)
- Court imposed trusts (e.g. a trust set up under a court order to hold a compensation payment)
- Pension scheme trusts (e.g. registered for the purposes of Part 4 Finance Act 2004)
- Disabled persons trust
- Trusts for bereaved minors or adults aged 18-25
- Insurance policy and death benefit trusts (life insurance trusts that pay out only on death, serious illness or disablement)
- Charitable trusts
- Pilot trusts (less than £100) in existence before 6 October 2020
- Will trusts (holding only estate property) are excluded for a period of two years from date of death. Whether the trust needs to register after two years depends on what type of trust it is.
- Trusts of jointly held property (where the Trustees and beneficiaries are the same persons)
- Commercial trusts during business transactions (i.e. holding client monies until completion)
- Childrens’ trusts
HMRC’s Trust Registration Service Manual provides details of all excluded trusts.
What records should be kept?
Information that is required to be maintained through the TRS includes the full names, addresses, dates of birth and national insurance numbers of the:-
- Settlor (that is, the person who created the trust)
- Beneficiaries (this includes minors – they cannot be described merely as a ‘class’ of beneficiary)
- The place where the trust is administered
- The date of creation of the trust
- Persons exercising significant control over the Trust (a parent or guardian)
- Adviser’s details who are being paid to provide advice to the Trustees
Are there any deadlines to be aware of?
You must register any express trusts in existence on or after 6 October 2020 by 1 September 2022
express trusts created after 1 September 2022 within 90 days
any changes to circumstances of registered trusts within 90 days
HMRC have confirmed that they will take proportionate action in response to any registrable trust that comes to its attention after the 1 September 2022 deadline.
What should Trustees do?
The responsibility for registration with the TRS falls with the Trustees.
A Government Gateway user ID and password will need to be created. Once you have an account, you can input all the trust details and any amendments can be made within 90 days. Trustees will need to gather together the full details of the parties to the trust to input in the TRS (full names, date of birth, National Insurance numbers and addresses etc) as well as information relating to the trust itself.
Trustees are required to maintain accurate and up-to-date written records of the beneficial owners of the trust and of its potential beneficiaries. Trustees of registered trusts must notify HMRC if details they have supplied (apart from asset values) change during years when the trust is taxable.
HMRC may issue a penalty if a Trustee has failed to register, update the register in time or submit an annual declaration by the deadline.
Registration of the trust with the TRS is something that the Trustees can look to do themselves or perhaps enlist the assistance of an Accountant. As there are ongoing responsibilities Trustees are encouraged to enlist the services of an Accountant to support them with registration with the TRS and ongoing annual declarations.
Disclaimer – As this is a specialist subject and we are not tax advisers, we would encourage Trustees to obtain specialist advice and assistance from an Accountant before registering a Trust with the TRS. We take no responsibility for any fines imposed as a result of non-registration/non-compliance with the TRS.