May 2021 – Trust Registration

Author: Mitchells Roberton
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  • Under the EU Fourth Anti-Money Laundering Directive only trusts with a UK “tax consequence” (or deceased’s estates which counted as “complex estates”) needed to be registered with HMRC’s online Trust Registration Service (“the TRS”).
  • Importantly however, the Fifth Anti-Money Laundering Directive which came into effect on 6 October last year has extended the requirements to all UK express trusts – whether or not they have any “tax consequence”. So, registration on the TRS will no longer be limited to trusts subject to some form of UK tax. There are a number of specified exceptions. The main ones are:
    • trusts used to hold money or assets of a UK-registered pension scheme, such as an occupational pension scheme;
    • trusts used to hold life or retirement policies providing that the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured;
    • trusts holding insurance policy benefits received after the death of the person assured, providing the benefits are paid out from the trust within 2 years of the death;
    • charitable trusts which are registered as a charity in the UK;
    • “pilot” trusts which were set up before 6 October 2020 and which hold no more than £100 – pilot trusts set up after 6 October 2020 will need to register;
    • will trusts which are created by a person’s will and come into effect on their death providing they only hold the estate assets for up to 2 years after the person’s death; and
    • trusts for bereaved children under 18 or adults aged 18 to 25 set up under the will of a deceased parent.
  • Apart from such exceptions virtually all express trusts will have to be registered even if they have no tax consequences. In particular, it may be noted that “bare trusts”, where the trustees hold property for one or more beneficiaries absolutely, are not amongst the specified exceptions.
  • The legal responsibility for registration lies with the trustees. Where there are multiple trustees, it is a matter for the trustees to decide and appoint a lead trustee to complete the registration process. All trustees are equally legally responsible for the trust, and therefore the nominated “lead” trustee is simply the main point of contact for HMRC. If, for example, there are four trustees, this would be recorded as one lead trustee and three additional trustees.
  • The new requirements aren’t yet fully operational. HMRC are carrying out the required upgrades to the TRS to allow the registration of all trusts. They have not yet confirmed when this will be ready but it is likely to be later this year.
  • After the TRS is fully operational there will be a 30 day registration period for new trusts created after that date. It is expected that all trusts in existence at that date will have a 12 month period in which to register.
  • Trustees will be able to register their trust with HMRC using a secure online service through the GOV.UK website and will need to give some basic information about the persons involved in the trust (the settlors and beneficiaries). This will apply to both taxable and non-taxable trusts.
  • It is the responsibility of the trustees to ensure that the information held on the register is kept accurate and up to date. Trustees will have 30 days from the date they become aware of any changes to ensure that the register is updated.
  • Widening the scope for registration with the TRS will significantly increase the administrative and compliance burden placed on trustees and executors, many of whom are lay individuals and may be unaware of their new duties.

Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Laura Schiavone: email laura@mitchells-roberton.co.uk

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