Calling all Trustees – Three Week Deadline
What is The Trust Registration Service?
The Trust Registration Service is an online service which assists Trustees to adhere to their registration obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
New regulations came into force in October 2020. The new regulations mean that there is an increase in the number of trusts that fall into the ‘need to be registered’ category.
Why, may you ask?
Reporting trusts with the Trust Registration Service is HM Revenue and Customs’ way of knowing what trusts are in existence, what these trusts own and who is associated with each trust.
What needs to be reported?
Registration is required for all express trusts, or relevant trusts (except those covered by the exemptions), all non-express trusts that have a tax liability and UK non-express trusts. From this you may already note that it is far more likely that a trust will need to be registered than not need to be registered and the majority of trusts in existence will incur some form of action due to the new reporting regulations.
Express trusts cover all trusts that we deal with on a daily basis such as asset protection trusts, family protection trusts, discretionary trusts and will trusts.
Link with Tax = gone
There used to be a clear relationship between tax liability and the need to register a trust. It is important to be clear that this no longer applies and even though a trust does not incur a tax liability, and may never incur a tax liability, that does not exclude the trust from registration.
Important dates for your diary (or ours!)
TYPE | REGISTER BY |
Trust created on or after October 2020 | 1 September 2022 |
Existing Trust (new UK Tax Liability) | 5 October following the end of the tax year |
Existing Non Taxable Trust | 1 September 2022 |
New Trust | 90 days from set up |
Reporting a change | 90 days from the date of change |
The 2 Year Rule
If a trust is created within a Will, such as a liferent trust or settlor interest trust, the trust requires to be registered 2 years from the date of the testator’s death. If the trust ceases to exist within this time frame it will not require to be registered. If a Liferent trust came into being due to the terms of a person’s Will, the Trustees may decide to register the trust at the same time as the Executry process is ongoing. This may be for practical reasons and to ensure that the costs of registering the trust are met by the estate. Others may decide to wait for a certain period of time in order to establish whether the trust will continue to be in existence come the 2 year mark.
Who is Responsible?
It is the Trustees’ responsibility to ensure that the Trust is registered with HMRC on time. The registration process does require the Trustees to appoint a ‘Lead Trustee’, however if there is more than one Trustee the responsibility is shared and does not fall on the appointed Lead Trustee alone.
HMRC can impose penalties against Trustees who do not comply with their duty to register the trust.
What Information is required?
Generally the same information is required for all trusts registered with the Trust Registration Service. To summarise, the main information required is as follows:-
- Full details of the Trust (name, creation date, type)
- Lead Trustee (full name, date of birth, National Insurance Number, address, telephone number, country of residence and nationality)
- All other Trustees, Settlors and Beneficiaries (full name, date of birth, National Insurance Number (if taxable), country of residence, nationality, mental capacity at the date of registration)
- Information relating to the assets held in the Trust (property, shares, money, etc.) and the value of the asset at the date of registration
The information that is required is specific to each trust and depends on whether the trust is taxable, the contents of the Trust Deed and the assets held in the trust.
Beneficiaries may be named as a class e.g. grandchildren. In these circumstances there is no requirement to obtain full information for TRS purposes. HMRC guidance also appreciates that some named beneficiaries will only benefit when a certain event happens, such as when the first named beneficiary passes away. For example, if Person A was to benefit in the first instance and their child B was to benefit in their place, we would not need to name B as a beneficiary initially and would only need to name A. If Person A passed away the register would need to be updated (within 90 days) to include Person B’s details as the event has now occurred.
How to begin…
The first step is to set up a Government Gateway Account with HMRC. Once the Gateway Account has been created you can begin to follow the steps to register the trust.
Trustees can begin the registration process by clicking on this link: https://www.gov.uk/guidance/register-a-trust-as-a-trustee and answering the questions as prompted.
With the 1 September 2022 deadline fast approaching, if you are not sure whether a trust requires to be registered or would like assistance to register a trust please get in touch and a member of our Private Client Team would be happy to guide you through the process.
