Trusts registration service and new anti-money laundering regulations - Private Client Solicitors

Trusts registration service and new anti-money laundering regulations

What is the trusts registration service?

The trusts registration service (TRS) is run by HMRC and is an online service via the Government Gateway.

When the TRS was set up trustees were obliged to register with HMRC various details of all trusts with UK tax consequences. This has now been extended to a number of other trusts without UK tax consequences.

Why is this required?

On 26 June 2017 the requirements imposed on EU member states by the Fourth Anti-Money Laundering Directive came into force in UK law. This obliges EU member states to record certain specified information with regard to trusts and to maintain a central register. In addition, trusts are required to maintain written records of the same information. The UK decided to implement the obligations imposed by this directive by creating the TRS which enables HMRC to maintain a Register of Beneficial Ownership. This was not at the outset open to public inspection but the implementation of the 5th Anti-Money Laundering directive in January 2020 meant that the requirement to register is  extended and limited access to the TRS will be possible.

Which trusts were initially required to register?

All express trusts which incurred a liability to pay relevant UK taxes in any tax year.

Relevant UK taxes are defined in the regulations as income tax, capital gains tax, inheritance tax, stamp duty land tax, stamp duty reserve tax and land and buildings transaction tax (Scotland).

What are the deadlines for registration?

Trusts which have not previously registered with HMRC under the previous paper system and have incurred either an income tax liability or a capital gains tax liability in any tax year are required to register by 5 October following the tax year when the trust was created or first began to generate chargeable income or gains (if later).

Trusts which have not previously registered with HMRC under the previous paper system, and which have incurred either an inheritance tax, stamp duty land tax, stamp duty reserve tax or a land and buildings transaction tax (Scotland) liability in any tax year, are required to register by 31 January following the tax year when the liability is incurred.

All trusts currently registered with HMRC which have incurred a relevant tax liability in any tax year have to confirm or amend existing information held by HMRC by 31 January following the end of the tax year in which the liability is incurred.

These requirements currently only apply to non-UK trusts if they receive UK source income or have incurred a relevant UK tax liability in any tax year.

What information needs to be provided?

The information required includes the following:

  • Details of the trust assets including any applicable addresses and market values.
  • The identity of the settlor (the person who created the trust or provided funds for it), the trustees, any protector, any persons exercising effective control over the trust and the beneficiaries or class of beneficiaries.
  • The name, date of birth, national insurance number or UTR (if UK resident and the national insurance number is available) and address and passport or ID number (including country of issue and expiry date of the passport or ID (if non-UK resident or if the national insurance number is not available)) is required for all of the above.

In addition, to comply with the new money laundering regulations, trustees are obliged to maintain accurate and up-to-date written records of all beneficial owners of a trust including details of potential beneficiaries. This applies to all trusts whether or not they have tax consequences in any particular tax year.

  • What changes have been made to the TRS?

Following the implementation of the 5th Anti-Money Laundering Directive the scope of the TRS has been expanded so that any UK trust not “out of scope” will be required to register whether or not they have tax consequences. In addition, the government will be required to share data from the register with a specified range of persons under certain circumstances.

The list of “out of scope” trusts not required to register is fairly extensive and, in the context of family trusts, includes:

  • Vulnerable beneficiary and bereaved minors trusts
  • Will trusts created on death that only receive assets from the estate and are wound up within two years
  • Existing trusts with assets of less than £100
  • Trusts created by or in order to satisfy the terms of a court order
  • Trusts created under the intestacy rules
  • Trusts of land that arise because of the imposition of law
  • Certain life policy trusts
  • Bare trusts of a bank account for a minor

Non-UK trusts are not required to register if their only link to the UK is through a business relationship with a UK based adviser. They will be required to register, however, if the trust has at least one UK trustee or the trust acquires land or property in the UK.

For further details on trusts not required to register see HMRC’s guidance: Trust Registration extension – an overview – GOV.UK (www.gov.uk)

Access to register information

Information about the trusts and their beneficial owner will be shared with “obliged entities” (including credit and financial institutions, lawyers, tax advisers and estate agents) with which the trust has a business relationship” of at least one year.

Information will also be shared with anyone who has demonstrated a “legitimate interest” in receiving information on a particular trust. The request must relate to suspected money laundering or terrorist financing and an assessment will be made as to whether the suspicion is reasonable. The government has given assurances that each request will be considered on its own merits and that information will not be shared if it would lead to disproportionate risks of, for example, fraud, kidnapping, blackmail or violence.

Information will also be shared with persons who require information on trusts which have a controlling interest in a non-EU company which is not registered on a beneficial ownership register in an EU member state.

Time limits for express trusts without tax consequences

Trusts in existence at 06/10/2020 >> 1 September 2022

Trusts set up after 01/9/2022  >> Within 90 days

What action do you as trustees need to take?

If we carry out the trust administration on the trustees’ behalf, we will collate all the necessary information and register the trust with the TRS within the specified time limits and maintain a written record of the required information. The method by which we are authorised to register the trust on the trustees’ behalf is fairly convoluted so we will need to contact the trustees about this.  If we do not hold all the necessary information on our files we may need to contact the trustees or the beneficiaries for certain details such as national insurance numbers.

Trust beneficiaries do not need to take any action but should be aware that certain information about them will be held on the TRS.

We hope that this leaflet explains why this information is being requested but please contact us if you have any queries.

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Disclaimer: This briefing is intended to highlight issues only for the purposes of general interest and is not intended to be a comprehensive statement of the law.  Although we have taken care over the information, you should not rely on it as legal advice.  We do not accept any liability to anyone who does rely on its content.

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