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HMRC set a deadline of 1 September 2022 for UK express trusts to be registered on the Trust Registration Service (TRS)
As part of the implications from the EU’s Fifth Money Laundering Directive (5MLD) and the accompanying legislation introduced into UK law (despite Brexit), HMRC set a deadline of 1 September 2022 for UK express trusts to be registered on the Trust Registration Service (TRS).
From 2017 to 6 October 2020, only trusts that had incurred a UK tax liability (taxable trusts) had been required to be registered on the TRS. The new rules extended the requirement to be registered to most non-taxable trusts unless they qualify as excluded trusts.
That deadline has now passed, so what are the implications for those who have registered and for those who have not?
Trustees have a duty to ensure all information is up to date
Firstly, trustees who have registered their trusts on the TRS have a duty to ensure that the information held on the Trust Register remains accurate and up to date. Any changes to details need to be updated on the Trust Register within 90 days of the date of the change. We can help trustees update details for a nominal fee.
If the trust was registered as a taxable trust, trustees must make a formal declaration on the TRS that the information held on the Trust Register remained correct and up to date throughout the tax year, even if there were no changes from the previous tax year. These declarations must be made by 31 January following the end of the relevant tax year, so, for the current 2022-23 tax year, by 31 January 2024.
Trustees must provide proof that the trust is registered on the Trust Registration Service with HMRC (TRS)
Secondly, any trustees who establish a new business relationship with an ‘obliged entity’ (also known as a UK relevant person) will be asked for proof that their trust is registered on the TRS or is otherwise exempt from registration. Registration can be proved by providing the obliged entity with a certificate that can be downloaded or printed from the Trust Register.
Some obliged entities will also be asking for proof of registration (or exemption from registration) where there are existing business relationships. In cases where proof cannot be established, the obliged entity may refuse to establish the business relationship or, for existing relationships, undertake any actions, thereby preventing the trustees from administering their trust and causing potential issues for both trustees and beneficiaries.
In situations where an obliged entity has advised trustees of the need to register the trust (or where issues have been identified with the information on held on the Trust Register for a registered trust that require amendment) and the trustees then take no action, the obliged entity is then required to make a report to HMRC highlighting the issues with this particular trust.
Obliged entities include banks, building societies, insurance companies, investment providers, accountants, solicitors, estate agents, tax advisers and other intermediaries.
Late trust registration – trustees must take action now rather than later
Thirdly, trustees who are required to register their trusts but have failed to do so by the deadline of 1 September 2022 should consider taking actions to register the trust sooner rather than later. As above, if dealing with obliged entities, the trustees may find themselves ‘in limbo’ and unable to administer the trust until such a time that the trust is registered on the TRS.
An article in The Daily Telegraph at the end of August estimated that around 800,000 trusts would miss the registration deadline. This figure is in line with our estimates and is likely to exceed the number of trusts that have been registered. However, trustees should not become complacent as HMRC has the power to levy penalties against trustees who have failed to register their trusts or who do not keep registered trust information accurate and up to date.
These penalties could be up to £5,000 per offence and it will be the trustees who will be personally liable, rather than the trust, for any penalties. We covered these penalties in more detail in our earlier blog, available here.
We would encourage trustees who have not yet registered their trusts to take action to regularise their position as soon as possible and certainly before HMRC start taking enforcement action.
Trustee Support Services continue to offer assistance to trustees who need to register a trust
Trustee Support Services continue to be able to register trusts on behalf of trustees. Our current fee for trust registration is £200 + VAT (£240 including VAT) per trust.
Finally, trustees of trusts that have been created since 4 June 2022, or will be created going forwards, are required to register their trusts on the TRS (unless it qualifies as an excluded trust) within 90 days of the trust’s creation date. Again, we can register trusts on the trustees’ behalf.