HMRC Trust Register

In September this year HMRC will start fining Trusts that have failed to comply with the requirements of the Trust Registration Service. Reshan Ragunathan, Trust and Estates Tax Assistant Manager at Kreston Reeves reminds trustees of the steps they must take.

The HMRC Trust Registration Service (TRS) was introduced in June 2017 as part of the UK’s implementation of the EU fourth money laundering directive (4MLD) designed to assist national authorities in combatting money laundering and terrorist financing. This meant that certain ‘express’ trusts (those trusts deliberately created by an individual) with an UK tax liability were required to register on the TRS. Further obligations were introduced for trusts on the TRS when the EU fifth money laundering directive (5MLD) was implemented in the UK on 6 October 2020.

Trusts

The information trustees are required to provide HMRC with on registration is broadly that for the settlors, trustees and any named beneficiaries together with the value and nature of any trust assets.

The implementation of the 5ML broadened the type of trusts that need to be registered and removed the caveat that only ‘express’ trusts with a UK tax liability need to be registered. These new rules mean additional trusts need to be registered as follows:

• All UK trusts – this is where either all the trustees are UK resident or the settlor and at least one trustee is UK resident (see below for exemptions).
• Non-UK trusts – where the trustees enter into a business relationship with a UK organisation that provides certain services (but only where at least one trustee is UK resident) or acquires land or property in the UK or has a liability to UK taxation.

Exemptions

Certain types of trust remain exempt from registration but only where only where no UK tax liability is incurred. Examples include:

• Trusts imposed by legislation or court order
• Trusts holding an insurance policy
• Employee share scheme trusts
• Trusts of jointly held property where the trustees and beneficiaries are the same
• Charitable Trusts
• Trusts where a disabled person is the beneficiary

At the time of writing there are fourteen trust types excluded from registration and detailed conditions apply to each category.

Deadlines

Any taxable UK trusts must register by the earliest of the following after the first tax year in which the tax liability is first incurred:

• Income or capital gains tax – 5 October
• Inheritance tax, stamp duty land tax or stamp duty reserve tax – 31 January

This also applies to non-UK trusts but subject to the above provisions.

Non-taxable UK trusts – subject to the exempted trust types, then if in existence on or after 6 October 2020 to 31 May 2022 then by 1 September 2022. If created after 31 May 2022 then it must register within 90 days of creation.

Further requirements

Once the Trust has been registered and if it suffers a UK tax liability, the trustees must also create a government gateway account and undertake an online ‘digital handshake’ process with HMRC to access the trust’s details on the TRS online portal.

If the trust is required to submit a tax return then an annual declaration must be submitted on the TRS confirming all the trust details are up to date before the return can be filed with HMRC. The TRS must also be updated within 90 days of certain changes to the trust for both taxable and non-taxable trusts that are required to register.

HMRC will be introducing penalties from September 2022 for non-compliance so this gives trustees and their professional advisors further time to meet all the detailed requirements.

How can we assist?

Our experienced trust team can assist trustees with understanding their TRS obligations and where necessary, we can also deal with both the registration and any ongoing work required.