At last HM Revenue & Customs (HMRC) have published their long-awaited Draft Regulations to expand the Trust Registration Service (TRS) under the EU's 5th Anti-Money Laundering Directive following two consultations on the proposed legislation. The second consultation sought clarification on several points the principal one being around clarification of which "express trusts" might be exempt after concern around the number of registrations the broad term would produce. It was thought that registrations could extend from 200,000 to over two million, without further guidance.
HMRC have also made some changes to other parts of the existing system around reporting deadlines for existing registrations, and the amount of information now required to be recorded for each of the people involved with the creation of, running of and benefitting from the trust assets.
As mentioned above the express trusts which may obtain an exception are listed below. The exception will only apply where no tax liability to Capital Gains Tax, Inheritance Tax, Land Tax under either LBTT or SDLT or Stamp Duty Reserve Tax arises in a tax year.
- UK charitable trusts
- trusts that arise as a result of statutory requirements – for example, statutory trusts arising for minor children under the UK intestacy rules
- trusts for a bereaved child set up under the will of a deceased parent of the child where the child will become absolutely entitled to the trust property on or before attaining the age of 25
- trusts created by a will which only hold assets forming part of the deceased estate and are wound up within two years of the deceased’s death
- ‘pilot’ trusts – trusts created before the Regulations come into force where the value of the property held by the trust does not exceed £100 (if further funds are added to the trust so that the trust fund exceeds £100 the trust will have to be registered at that point)
- trusts created by, or to satisfy, a court order – for example, on divorce or the dissolution of a civil partnership
- co-ownership trusts that exist solely for the purpose of jointly owning UK land
- trusts that exist where two or more people co-own an asset legally and beneficially for themselves – for example, a bank account or shareholding
- pension scheme trusts
- trusts of life insurance policies or policies solely for the payment of retirement death benefits - which only pay out on the death, terminal illness or permanent disablement of the insured, or to meet healthcare costs
- trusts incidental to commercial transactions
- Authorised unit trusts.
For existing registrations, any changes which took place before 6 April 2020 must be reported by 31 January 2021, where the trust was liable to tax for any of the three preceding tax years. Changes in the tax year 20/21 must be reported by 31 January 2022, if the trust was liable to tax in that year.
Trusts which are not already registered but are now required to register will have until 10 March 2022 to do so or 30 days from the creation of the trust. If any of the information changes TRS must be updated within 30 days of the change.
With the added introduction of a "digital handshake" style of authorisation also added in April this year to the list of tasks to be undertaken by Trustees and their agents, a task that must be completed regardless of digital ability before any new registrations or changes to existing registrations can be made, there is plenty to be done in bringing registrations up to date.
Get in touch
Elgin: 01343 542623
We have solicitors and offices across the country and are ready to help.