The UK Trust Registration Service (‘TRS’) is essentially a register of the beneficial ownership of trusts.
The responsibility of registering and maintaining a trust with HMRC via the TRS rests with the trustees and it is a requirement that has become ever more complex.
The need to register a trust was extended as a result of the EU’s Fifth Anti-Money Laundering Directive (‘5MLD’) becoming part of UK legislation and it is vital that this requirement is adhered to. The register is not a public register and will remain confidential with the information held by HMRC. Only those involved in the prevention of money laundering, countering of terrorist financing and associated offences can request access and information will only be released in certain limited circumstances.
Trustees will also need to provide evidence of registration when entering into a new business relationship with entities including UK banks and investment managers who are covered by 5MLD.
Most trusts will likely now need to be registered as the expanded TRS does not simply catch UK trusts or those with UK tax liabilities. However, there are some limited exceptions to registration, which are permissible, but these will need to be considered carefully.
Which trusts will need to be registered?
Trusts are used extensively and often feature in situations unbeknown to many.
One of the terms used by HMRC to determine whether a trust requires registration is whether it is an “express” trust. An express trust is usually in writing but could be established orally. There are three main features often referred to as the three certainties:
- Certainty of intention – the intention of a settlor (the person creating the trust) to do so;
- Certainty of subject matter – the property or assets over which the trust is created; and
- Certainty of objects – who is to benefit.
Express trusts are also distinguished by separation from legislative trusts, such as those implemented by statute, e.g. in the case of intestacy where the deceased’s assets are held on trust to ultimately pay those entitled to benefit or a trustee in bankruptcy where a bankrupt’s property is held to settle debts due.
They are also separate from trusts imposed by Court Order, such as those trusts set up during matrimonial proceedings, where a court may direct that a trust be established.
The three main categories that now require registration are, as follows:
- All UK express trusts unless excluded from registration under one of the exclusions listed by HMRC;
- Non-UK resident express trusts where there are connections to the UK such as UK-resident trustees, UK property or land is held or the trustees enter into a business relationship with a UK relevant person e.g. financial institution, legal professionals etc; or
- Trusts that have a UK tax liability even if they are not express trusts or were excluded as an express trust. Taxes to consider include Income tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Land and Buildings Transaction Tax (in Scotland), Land Transaction Tax (in Wales).
What information needs to be provided?
The information that is required is fairly extensive and includes detailed information within the following categories:
- Trust details
- Settlor(s) details
- Trustees’ details
- Beneficiaries’ details
- Protector(s) and any other associated individuals
- Interests in non-EEA companies
- Assets (values at time of initial registration)
What is the process?
There are various steps that will be required to be completed as part of the initial registration:
- If registration and completion of trust information for submission is to be made by an agent, such as Withers LLP, a trustee will need to provide information (as above) to the agent for input it, as a draft return, onto the TRS portal;
- A trustee is required to create an online account with HMRC known as a Government Gateway account;
- The trustee needs to answer questions about the trust in order to ‘claim’ it;
- The agent will then provide a link to a trustee, in order to authorise the agent to act;
- A draft TRS submission made available for the trustees to review and approve; and
- The agent completes a declaration and submits the TRS return to HMRC.
Penalties for not registering
The penalty regime for late registration is as follows for an administrative failure:
- Registration made up to three months after the due date: £100 penalty
- Registration made three to six months after the due date: £200 penalty
- Registration more than six months late: either 5% of the total tax liability or £300 penalty, whichever is the greater sum.
It is understood that HMRC will, at least initially, be taking a pragmatic and risk-based approach to charging penalties.
For trusts created before 6 October 2020 that have not been required to be registered before but need to now be registered, must register on or before 1 September 2022. This includes Trusts that have subsequently closed. Those trusts created after 6 October 2020 must register within 90 days of being created or otherwise becoming registerable, or by 1 September 2022 (whichever is later). If your trust is liable for more than one tax and both deadlines could apply, you must register it by the earlier of the 2 deadlines.
The Trust Register should also be updated within 90 days of any changes to a trust’s details or associated parties. Where trustees submit a UK self-assessment tax return, the trustees must also declare therein that the register is up to date.
How can Withers help you?
Withers LLP is able to offer through its Trust Management Group a highly professional and dedicated service to trustees, in registering and maintaining a trust’s records on the Trust Register.
We can determine whether there is an initial requirement to register and guide trustees through the process set out above.
We provide a clear succinct format for obtaining the required information for registration.
Process the detailed trust information and make the trustees TRS submission and declaration as their appointed agent.
We can update the Trust Register when there are changes to the Trust such as change of trustees, change of beneficiaries, change of contact details etc.
We can maintain the Trust Register on an annual basis and will share the details previously registered so that the details can be considered for updates, as required.
Terms and conditions
The firm’s terms and conditions of business in force from time to time will apply and Withers LLP reserves the right to charge additional fees for any matters arising which do not occur in the normal course of business.
To find out more
If you would like to know more about our firm and our areas of expertise, please speak to your usual Withers contact or any of the authors of this article.