What is the Trust Registration Service (TRS)?
The Trust Registration Service (TRS) was introduced in June 2017 as a result of the 4th Money Laundering Directive (‘4MLD’) to gather more information about trusts in a drive towards more transparency and to enforce compliance. The 5th Money Laundering Directive (‘5MLD’) came in to force on 10 January 2020 and this has resulted in a number of changes to the TRS requirements which took effect from 6 October 2020.
What requirements did 4MLD impose in respect of Trust Registration?
This required new and existing trusts with tax liabilities to register with HMRC via the online Trust Registration Service portal. This procedure replaced the completion and submission of the Form 41(G) for trusts. As part of the drive towards transparency, the TRS requires trustees to provide national insurance numbers and dates of birth for all trustees, settlors, beneficiaries and other individuals with control/influence, as well as an accurate list of assets held within the trust at the date the trust commenced.
Under 4LMD all existing trusts as at June 2017 with tax liabilities were required to register by 31 January 2018. In addition, all new trusts with tax liabilities were required to register by 5 October following the tax year they first became liable to tax. A penalty regime was also introduced for late registration.
4MLD also required trustees to submit an annual declaration to HMRC by 31 January following the tax year confirming whether there have been any changes to registered information or not. However, this requirement only applies to trusts with a tax liability.
What effect has the transfer from 4MLD to 5MLD had on the TRS?
The 5MLD widens the definition of trusts required to register, changes the deadline for registration, changes the deadline for reporting changes to registered information and removes the link with taxation meaning that even certain trusts without tax liabilities have to register.
What types of trust now need to register under the TRS?
In terms of the scope of trusts now impacted by the TRS there are now three broad categories for which trusts need registering:
- All UK express trusts (regardless of whether they have a UK tax liability);
- Some non-UK express trusts (for example trusts who have no UK trustees but own land/property within the UK and/or trusts with at least one UK trustee which acquires UK property or enters into a business relationship with a relevant person in the UK such as a financial adviser or other obliged entities);
- Non-express trusts and excluded express trusts where they have a tax liability. Although there is a low money laundering risk, they must still be registered to receive their Self-Assessment (SA) Unique Tax Payer Reference (UTR) which is required to submit SA tax returns.
What is the new deadline for registering trusts under the TRS?
The regulations originally stated that the deadline for registering new trusts was changing to 30 days from the date the trust was set up. However, following representations from various professional bodies this has been increased 90 days. Therefore, all trusts created on or after 1 September 2022 must be registered within 90 days.
The regulations originally stated all non-taxable trusts existing prior to 9 February 2022 are required to register by 10 March 2022. However, there have been delays in getting the TRS system ready to accept registrations from non-taxable trusts. Therefore, HMRC have said they will extend the registration deadline to the later of 1 September 2022 and 90 days from the inception of the trust for non-taxable trusts in existence on or after 6 October 2020. HMRC announced that the portal was available to accept registrations from non-taxable trusts on 1 September 2021.
How do trustees notify HMRC of any changes to the trust and what is the deadline?
The deadline for notifying changes to registered information will be reduced to 90 days from the date the trustees become aware of the change. This deadline was originally to be 30 days but HMRC have extended the time limit to 90 days as a 30-day window was likely to be challenging for trustees.
What records do trustees need to keep?
The regulations require trustees to maintain accurate and up to date written records of all the actual and potential beneficial owners of the trust
The information to be maintained:
- Full name of the trust
- The date on which the trust was created
- The country where the trust is considered to be resident for tax purposes
- The place where the trust is administered
- A contact address for the trustees
- Full name of advisers who are being paid to provide legal, financial or tax advice to the trustees in relation to the trust
- Details of the settlors and beneficiaries
This information should be held because under the legislation any law enforcement authority can request information about the beneficial owners of the trust including from a trust which does not incur a liability to any of the relevant UK taxes.
The rules in respect of trust registration are complex and the HMRC guidance is not yet complete.
Therefore, if you’re unsure of whether you need to register or want help registering in itself, please don’t hesitate to contact Aaron Hemmington, Tax Partner at Hawsons or Natasha Fathers, Director at Hawsons Wealth Management.
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