Trusts can affect individuals and families in a number of ways, often occurring where there are second marriages, for tax planning or for the protection of vulnerable beneficiaries. The role of Trustee and the position of Trusts can be daunting with various duties and regulations applying and new rules being implemented.
What is the Trust Registration Service?
One of the more recent requirements for Trustees to consider is the HMRC’s Trust Registration Service (TRS). Since coming into existence in June 2017, trusts with UK tax liabilities have had to be registered with the HMRC by providing various details relating to the trust, including details of its settlor, its trustees and its beneficiaries.
The 5th Anti Money Laundering directive resulted in additional regulations being adopted that came into force in the UK on 6th October 2020. This will broaden the scope of the TRS to various trusts, which will need to be registered by 10 March 2022. The requirement is for registration for all UK express trusts (regardless of their tax liabilities) unless they fall under the list of exemptions. These exemptions include trusts created by law, for example those occurring in certain circumstances if an individual dies without a will, pension trusts, charitable trusts, trusts for vulnerable beneficiaries or bereaved minors, personal injury trusts and co-ownership trusts, amongst others. Existing pilot trusts that hold assets with a value of less than £100 are also exempt until/unless further assets are added.
The duty to register has also been extended to non-UK express trusts which acquire UK Land or have a UK Trustee and enter into a business relationship with a UK regulated business.
Any new trusts coming into existence after 9 February 2022 will be obliged to register with the TRS within 30 days of coming into existence. There will be penalties issued by the HMRC where Trustees failed to meet with these requirements.
This means that numerous trusts that have previously had to have little interaction with the HMRC will now be required to register their Trust with the HMRC providing all necessary details. If you believe that your trust may be affected by these new regulations, our team would be happy to assist you in ensuring your compliance.