THE TRUST REGISTRATION SERVICE

The introduction of the EU’s 5th Money Laundering Directive in July 2018 brought new requirements for trustees to register UK trusts with HMRC. This expanded the scope of the existing register, which was introduced by its predecessor and made it a legal requirement for all taxable trusts to be registered. Despite having left the EU, the UK agreed to maintain the Trust Registration Service (TRS) as part of the Brexit Withdrawal Agreement. This new legislation requires all UK non-taxable express trusts and non-UK express trusts with links to the UK, such as those having a UK-based trustee or that owns land in the UK, to be registered. (e.g. stocks and shares)

Some trusts are excluded from the requirements, notably registered pension schemes, charitable trusts, disabled person trusts, will trusts that are wound up within two years of death, and life or critical illness assurance policies placed in trust. Bare trusts for minors holding cash in banks and building societies are also excluded as are Junior ISAs and Child Trust Funds. The question of whether premium bonds held for minors require registration remains outstanding. The full list of trusts not required to register can be found on GOV.UK. Lead trustees are responsible for deciding whether a trust is excluded or not.

Express trusts are generally defined as trusts that a settlor creates intentionally, rather than through other means, such as through court order or statute. The legislation therefore captures: In order to register a trust with the TRS, trustees must first obtain a Government Gateway ID for the trust, noting that this is an organisation account for each trust and not a personal one.

• Discretionary trusts • Interest in possession trusts • Many bare trusts • Employee ownership trusts • Investments held on trust for the benefit of a minor child Thereafter, the process of registering a non-taxable trust is relatively straight forward.

The lead trustee needs to confirm the trust details: the trust name, settlement, classes of beneficiary, whether its land or property was acquired after 6th October 2020, and whether

it is already registered on the trust register of any other European Economic Area countries, (as these may be excluded from registering in the UK), such as offshore bonds based in Ireland.

Trustee and named beneficiary names, dates of birth, nationality and residency status along with the National Insurance number and contact information for the lead trustee are also required.

Following this, a unique reference number is issued with a certificate of registration. Taxable trusts will be issued with a unique taxpayer reference.

Trusts which hold offshore investment bonds based in Ireland also need to register with the Central Register of Beneficial Ownership of Trusts (CRBOT) in Ireland. Although the registration deadline was 23rd October 2021 or within 6 months of creation if after 6th April 2021, as UK trustees were initially unable to access the CRBOT a degree of flexibility was adopted about the timing. At the time of writing (July 2022) the offshore life offices and their representative body (AILO) are still in contact with the Irish Revenue in an attempt to find a simple way forward.

What happens to personal data is always a consideration. The good news is access to this is limited and only available to those with a ‘legitimate interest’, such as law enforcement agencies investigating money laundering and the financing of terrorist activities. HMRC can refuse access where there is a disproportionate risk of exposing the beneficial owner for example to fraud, blackmail, or intimidation.

TRUSTS - TAKING ACTION

06/10/20 The deadline for taking action depends on when a trust was created – non-taxable trusts in existence before 6th October 2020 must be registered on or before 1st September 2022 (even if the trust has been subsequently closed).

01/09/22

06/10/20 Non-taxable trusts created after 6th October 2020 must be registered within 90 days of creation or the 1st of September 2022 (whichever is later).

01/09/22 OR

06/04/21 Trusts subject to capital gains or income tax created after 6th April 2021 have 90 days to register, or before 1st September 2022.

01/09/22 OR

06/04/21 Taxable trusts created after 6th April 2021, must be registered on or before the 5th of October following the end of the tax year in which it first starts to receive income or gains liable to tax. TAX YEAR

Those previously liable for income or capital gains or other taxes, such as inheritance tax, have until the 31st of January following the tax year end. Where two deadlines apply, the earliest takes precedence. TAX YEAR

05/10

31/01

Thereafter, the register must be updated annually, or within 90 days of any change to trustee or beneficiary details or new tax liability.

ANNUAL OR

For trusts not registered on time, or kept up to date, HMRC may issue ‘nudge’ letters or issue penalties.

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