Trust Registration Service – don’t miss the 1 September 2022 deadline!

The Trust Registration Service (TRS) was introduced by HM Revenue & Customs (HMRC) in late 2017.  It was set up as part of an EU anti-money laundering directive aimed at combatting money laundering, serious crime, and terrorist financing.

Initially only trusts that paid certain taxes were required to register with the TRS.  However, new rules came into force in October 2020 that require most UK trusts and some non-UK trusts in existence on or after 6 October 2020, to register with HMRC by 1 September 2022.  This also includes trusts that have closed since that date.

The new rules have widened the TRS to all UK trusts, including trusts that are not liable to tax, unless the trust falls under a specific exclusion.

The TRS now covers the following trusts:

• All UK express trusts unless specifically excluded
• Non-UK trusts with UK assets and UK tax liabilities
• Non-UK trusts which acquired UK land after 6 October 2020.

An express trust refers to a trust which was deliberately created by the settlor usually in the form of a document such as a written deed or declaration of trust.

If the UK express trust owns overseas assets, most commonly an offshore bond, then there could be registration requirements in the country where the assets are based.   For example, the Irish Tax authorities expect UK trusts to register in Ireland if the trust owns an Irish bond.  Each country will have slightly different rules so advice from an accountant in that jurisdiction may be required.

Excluded Trusts

HMRC have provided a list of trusts that it considers low risk and are therefore exempt from registration as long as no tax liability arises. Some trusts which are exempt are as follows:

• Trust used to hold money or assets of a UK registered pension scheme
• Trust used to hold life insurance policies provided that the policy only pays out on death, terminal or critical illness of permanent disablement
• A charitable trust which is registered as a charity in UK
• Trust for bereaved children under 18, or adults aged 18-25 set up under the will or intestacy of a deceased parent or the Criminal Injuries Compensation Scheme
• Will trusts that are wound up within two years of date of death
• Deposit accounts opened for minor children.

Registration Requirements and Deadlines

If you are a trustee of a trust, it will be your responsibility to decide whether the trust should be registered with HMRC under the TRS and take appropriate steps to get the trust registered.

The deadline for registering a trust which was in existence on 6 October 2020 under the TRS is 1 September 2022.

For trusts set up after 6 October 2020 the deadline is the later of 1 September 2022 and 90 days after creation.

The registration process is undertaken online via the Government Gateway with HMRC requiring basic information (name, date of birth and nationality) of the settlor and beneficiaries of the trust. For the trustees, the same basic information will be required, however one trustee has to be nominated as the lead trustee. The lead trustee also has to provide their address, telephone number and National Insurance Number or passport details which HMRC will verify while the application is in process. The registration cannot be completed without the successful verification of the lead trustee.

If the trust existed on 6 October 2020 but has since been wound up the trust will still need to be registered with HMRC under the TRS. After registering the trust, a notification can be sent to HMRC advising that the trust has ceased and to ask for the record to be closed.

If you are the trustee of a trust and think that you might have a reporting requirement, please do not hesitate to contact us as we are able to complete trust registrations though our own agent account with HMRC.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Ronda Dorsey on Unsplash