Author: Ruleguard – ruleguard.com
From the 1 September 2022, most trusts will need to be registered with the HMRC. There are few exceptions.
What’s changing and why?
Back in 2017, you may recall that the UK set up the Trust Registration Service (TRS) to fulfil its obligations under the Fourth Money Laundering Directive (4MLD). The TRS was set up to improve transparency regarding beneficial owners of assets held in trusts. Trustees were obliged to register a trust if it was liable to pay:
- income tax
- capital gains tax
- inheritance tax
- stamp duty land tax or stamp duty reserve tax.
Then came the Fifth Money Laundering Directive (5MLD) and additional rules were introduced in October 2020. This resulted in extending the scope of TRS’s remit and widening the range of trusts obliged to disclose information.
New rules introduced on 6 October 2020 extend the scope of the trust register to UK and some non-UK trusts, with some specific exclusions, regardless of whether or not the trust is liable to pay any tax.
It’s not just trustees that need to pay attention. Other firms must check that client trusts are aware of their obligations and meet the registration requirements. This means third party oversight of those client trusts. A formal confirmation of TRS registration is required (and any up-to-dates).
Firms should review contractual arrangements. Do your arrangements allow you appropriate access to the information that you need? What information do you currently gather and it is up-to-date? How do you know that your records are accurate?
What happens if legal obligations are not met?
HMRC has the power to impose a fixed penalty on a trust. This could be imposed where trustees fail to register the trust or do not maintain details on the register.
To read more about this subject, click here.