HMRC's Trust Registration Service, which was initially introduced in 2017, made it a requirement for certain trusts to provide HMRC with information regarding trustees, beneficiaries and trust assets.
Since the TRS was introduced, HMRC have extended the list of trusts that will need to be registered with them and there is now a requirement for each trust's record to be reviewed and updated each year.
Almost 6 years on from the introduction of the TRS, I am still coming across a large number of trusts that have not been registered and trustees who are unaware of their obligation to do so.
Some of the most common types of trust that need to be registered on the TRS are:
- A trust created by a Will where the trust still exists following the second anniversary of death (including bare trusts, life interest trusts and discretionary trusts);
- A discretionary trust set up by anyone during their lifetime;
- A Will Trust that is less than 2 years old but has had property added to it from outside of the estate;
- A bare trust for grandchildren;
- Some property trusts, where the legal owners on the title of the property are different to the beneficial owners. For example if X is on the title of the property as the legal owner and there is a Declaration of Trust that states the property should be held equally for X, Y and Z the property will need to be registered.
- Any lifetime settlement created with a nominal sum set up after 6 October 2020;
- Most trusts that have a UK tax liability are required to register on the TRS (some of the relevant taxes include Income Tax, Capital Gains Tax, Inheritance Tax and Stamp Duty Land Tax).
- A non UK trust that has at least one UK trustee may also need to register in certain circumstances.
If you are a trustee of a trust that would be included in any of the descriptions above and your trust has not been registered, it is vital that you take advice and register as a matter of urgency as there may be a late registration penalty imposed by HMRC that you will be liable for.
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.
