As part of a wider system of reforming taxation HM Revenue & Customs (HMRC) is gradually implementing changes to move tax reporting online. The digitisation of HMRC reporting, combined with more stringent anti money laundering rules and demands for transparency around individuals associated with assets held in trust gave rise to the online Trust Registration Service (TRS) in 2017. On inception, the TRS required any trusts giving rise to a tax liability in any tax year to be registered.
The changes from October 2020 – New requirements
The Fifth Anti-Money Laundering Directive came into force on 6 October 2020. It is an increased effort by HMRC to obtain details to mitigate criminal financing. The effect of the new Directive on the TRS is that the scope of registration is now wider meaning that all trusts (with a few exceptions) must now be registered with the online service.
The new rules require trustees of taxable and non-taxable UK trusts, trustees of non-UK trusts that obtain an interest in UK land and UK trustees which form a 'business relationship' with a UK advisor to register with the TRS.
The registrable information on the TRS includes personal details of trustees, beneficiary, settlors and other associated individuals who have a beneficial interest in the trust. All changes must be updated on the TRS and a declaration made by the trustees that the information on the TRS is accurate and up to date, whether there has been a change or not.
The exceptions to the TRS are trusts that are limited in their purpose and therefore deemed not a likely vehicle for money laundering and/or terrorist financing. The trusts that are not registerable are: pension schemes, life insurance policies, pilot trusts holding less than £100, charitable trusts, will trusts created on death and terminated within two years of death, property co-ownership trusts and trusts for bereaved children set up in a deceased parent's will or Criminal Injury Compensation Scheme.
Registration and declaration
Trustees will be responsible for updating the TRS portal, with one lead trustee as the main point of contact to provide accurate information on the relevant trust. Trustees will also be required to make a yearly declaration that the TRS is correct and up to date. A unique taxpayer reference will be generated for every registered trust, in addition to a record of the details of the persons involved. The TRS register will not be public and information can only be requested from HMRC in very limited circumstances.
Deadline for registration
The new TRS online portal is not yet live; therefore, trustees of trusts that fall under the new rules cannot currently register the trusts online. HMRC proposes to launch the new portal later in 2021. The deadline for the newly registerable trusts is twelve months after the date that the new service becomes available. After this initial deadline has passed, trustees must register relevant trusts 30 days from the date of settlement.
Our team are available to advise and help trustees in dealing with the registration requirements. Please contact Jeremy Crouch who will be happy to answer any queries you may have.
Originally published 8 April 2021.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.