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Do I need to register my trust? Navigating the new Trust Registration Service

Rachael Pratt, solicitor & Merry Abbott, solicitor, JMW Solicitors, 25/04/2022

The Trust Register was introduced in 2017 to improve transparency around the beneficial ownership of assets held in trusts. Since the introduction of the Trust Register most trusts with a UK tax liability have been required to register. However, the scope of the Trust Register has been expanded which now means that, subject to exceptions, all existing UK trusts and some non-UK trusts, whether taxable or not, will be required to register with HMRC’s TRS by 1 September 2022 so it is important that all Trustees are aware of their obligations before the deadline.

The changes have come about following the UK’s implementation of The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020, and more specifically the EU’s Fifth Money Laundering Directive (5MLD) which have caused the scope of the TRS to be extended.

 

What are the main changes?

The main changes to the TRS rules are:

1. All UK express trusts whether or not they have tax liabilities must now be registered, subject to the exemptions below. Express Trusts are those which are set up by a settlor intentionally rather than through the courts.

2. Trusts which are already registered will have to provide some additional information about their beneficial owners.

3. Non-EU Trusts will be required to register if they enter into a business relationship with a UK service provider or acquire UK real estate.

4. Third parties will be able to access information on the Register.

5. Trustees will be required to supply the trust’s registered beneficial ownership information to any service provider with which they enter into a business relationship. Service providers will have to report any discrepancy between the information on the Register and the information obtained as part of the due diligence obligations.

6. Trustees will only have thirty days from the creation of a trust or from the date of any changes to the beneficial owners of the trust to report the relevant information.

The changes to the rules create significantly more compliance issues for Trustees than were previously in place therefore it is imperative that all trustees review their position in relation to registering on the Trust Register and updating existing details to avoid penalties.  

Once registered, the Trustees must also remember to keep the register up to date on an annual basis, in addition to submitting the relevant tax returns which should declare that the Trust Register is up to date.

Excluded trusts

 

Certain express trusts are excluded from the new registration requirements. This is because these trusts are considered at lower risk of money laundering or terrorist financing due to other registration and regulatory requirements. However, a trust that is otherwise excluded from registration is still required to register if it has a liability to UK taxes.

Examples of express excluded trusts are (but not limited to):

- Will trusts which are wound up within two years of death

- Co-ownership trusts where the legal and beneficial owners

- Trusts of life policies paying out on death, terminal illness or disability

- UK charitable trusts

- Trusts imposed by statute such as on intestacy of bankruptcy

- Maintenance Fund Trusts (trusts approved by HMRC for the maintenance of specific historic buildings or land)

- Pilot trusts set up before 6 October 2020 which hold assets with a total value of £100 or less

What should trustees do now?

 

The responsibility for registration lies with the trustees so anyone who thinks they may need to register should take action as soon as possible. A lead trustee must complete the registration process or they may wish to appoint an agent, such as a solicitor, to register the trust instead. In order to register, the trustees will need the following information:

- The name of the trust;

- The date the trust was created;

- If the trust is an ‘express trust’ or not;

- Details of any UK land or property owned by the trust;

- Name, DOB and National insurance number of the lead trustee (or passport details if they are not a UK citizen);

- Telephone number; and

- Country of residence and nationality.

Trustees should take specific legal advice to establish their obligations and ensure that they meet the upcoming deadline. A failure to register a trust or update the register with a change of information can result in penalties being issued by HMRC.

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