What is the TRS?
HMRC’s Trust Registration Service (TRS) was initially introduced to comply with the requirements of the Fourth Money Laundering Directive (4MLD) for trustees to provide information about trusts and their beneficiaries. Prior to 4MLD, HMRC required completion of paper Form 41G (Trust) to register a new trust. This captured important information such as the names and addresses of the trustees, details of any professional agent acting, the governing law, lifetime trust or will trust, and so on. HMRC did state however “if there is no income arising, and no likelihood of income or gains in the future, you do not need to complete this form”. This was a useful exclusion in situations where the trust fund comprised only a non- income producing asset.
Which trusts need to register?
4MLD limited the obligation to register with the TRS to express trusts with taxable consequences (relevant trusts). 5MLD significantly widens the scope of trusts that are required to register with the TRS. The starting point is that all trusts are required to register with the TRS, unless they fall within one of a limited number of excluded categories. Please read our other articles this month for examples of trusts that must register with the TRS and/or when they will fall within one of the exclusions.
What information must be registered?
The information required to register with the TRS differs depending on whether it is a taxable relevant trust or a trust that is currently not liable to pay UK tax. The latter is then divided into type A and type B trusts and the information that each type needs to provide differs. In most cases, the name of the trust, date of creation, type of trust and assets held will need to be provided, as well as the name, address, date of birth and national insurance number for each of the settlor, trustees and beneficiaries.
When must the trust be registered?
Taxable relevant trusts set up before 6 April 2021 must be registered by 31 January after the tax year in which the liability arose. Taxable relevant trusts where the trustees became liable to pay UK taxes between 5 April 2021-9 February 2022 must be registered by 1 September 2022 (this is an extended deadline as the TRS only became available in September 2021). This deadline also applies to non- taxable trusts which meet the criteria for registration before 9 February 2022. Any non-taxable trusts created after this date must be registered within 90 days of being set up.
What are the trustees ongoing obligations?
Once the trust has been registered, any changes must be reported to HMRC within 90 days of them occurring. If the trust is taxable, the trustees must declare annually that the details of the persons associated with the trust are accurate and up to date. This must be done, regardless whether there have been any changes within that year.
What are the consequences of non-compliance?
The legal responsibility for registration lies with the trustees and financial penalties will be imposed by HMRC for failure to register or failure to keep the register up to date.
How can we help?
If you need assistance with registering your trust, complying with the ongoing TRS obligations or are not sure whether your trust needs to be registered, please contact our specialist Trust Manager Lauren Hockley-Smith for advice on 020 7504 1152.