Ola Adeosun, Partner and Senior Wealth Planner
What is the HMRC Trust Registration Service (TRS)?
The TRS was set up in 2017 as a result of the 4th Anti-Money Laundering Regulations 2017 (4MLD), with the objective to improve transparency about the ownership of assets held in trusts. The TRS replaced the old paper form 41G previously used for registration of new trust arrangements. When introduced, the TRS required trustees to register if the trust was liable to pay any of the following taxes: income tax, capital gains tax, inheritance tax, stamp duty land tax or stamp duty reserve tax.
The TRS is a single online route for trusts (and complex estates) to comply with their registration requirements and to obtain a unique tax reference (UTR) in meeting their tax obligations via self-assessment (SA). The legal responsibility for registration lies with the trustees. In the case of multiple trustees, the trustees are required to elect a lead trustee to complete the registration process.
Widening the scope
The subsequent introduction of the 5MLD extended the scope of the TRS to apply to all UK registered trusts and some non-UK registered trusts, regardless of whether the trust has any tax obligations. In other words, the 5MLD has removed the link to taxation as the reason for trusts to register on the TRS. The 5MLD regulations came into force on 6 October 2020.
Trusts that are required to register on the TRS fall into three broad categories as follows:
Whilst not a complete list the following trust arrangements do not currently need to register:
It is important to note however, that all excluded trusts arrangements would still need to register in the event they incur a tax liability.
Information required by the TRS
The original deadline for most trust arrangements was March 2022. However, TRS online functionality was such that trustees of non-tax-paying trusts were initially unable to register trusts under the new rules. HMRC has now however confirmed that the TRS is open for non-taxable trust registrations from the beginning of September 2021. In recognition of this delay, the deadline for registration of non-taxable trusts has been pushed back to September 2022.
In due course, trustees will have just 30 days to register and updates will be required for existing information held on the register within 30 days from the date they become aware of the changes.
The impact of the TRS is far-reaching. Any individuals who have a settlement into a trust or lay trustees of existing trusts should review their existing arrangements and speak to their professional advisers to determine their TRS obligations. HMRC is likely to impose penalties in the event of delays for registering a trust within the required deadlines.
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