What do you need to do next?
Lucy Wood, B P Collins’ wills, trusts and probate lawyer advises that given the significant changes, it is imperative that trustees review their position to avoid penalties.
What is the Trust Registration Service?
The Trust Registration Service (TRS) is a register of the beneficial ownership of trusts. The TRS is an online service which came into force on 26 June 2017, replacing the old paper system. The TRS provides trustees and personal representatives of complex estates a clear avenue to comply with their registration obligations under money laundering legislation. The TRS also seeks to improve transparency around the ownership of assets held in trusts with UK tax liabilities, making it harder for money to be ‘hidden’ in trust structures.
What is changing?
When first set up in 2017, trustees were required to register on the TRS if the trust was liable to pay any income tax, capital gains tax, inheritance tax, Stamp Duty Land Tax or Stamp Duty Reserve Tax. This information was then accessible to HMRC and other law enforcement agencies, but not to third parties. In 2020, new rules extended the scope of the TRS to all UK trusts, irrespective of whether the trust is liable to pay any tax, and some non-UK trusts.
In 2022, the TRS is changing again so that information held on the register may be provided to organisations focused on anti-money laundering and counter terrorist financing. The information will only be released on request, and only in certain limited circumstances.
How does this affect me and my trust?
When the TRS scope was extended in 2020, registration was initially delayed. The registration system has since gone live on 1 September 2021, meaning that almost all trusts are now required to be registered within their specific deadlines, even if they have not incurred a tax liability.
Do I need to register my trust?
While most trusts must now be registered, there are some exclusions. For example, where the perceived risk of money laundering is low, such as trusts of registered pension schemes or trusts arising from intestacy.
However, trustees must retain all information on trusts, and, even if a trust is excluded from registration, trustees can use the TRS as a convenient way to record all necessary information relating to their trust.
What are my next steps?
The responsibility for registering a trust lies with the trustees, and each trust must be registered individually. HMRC provides broad guidance on different types of trusts and whether they are required to register on
the TRS. However, as trustees have a legal duty to comply with HMRC reporting requirements in a timely manner, trustees can seek specific legal advice on reporting obligations and registration deadlines relating to their trust.
B P Collins’ private client team advises on setting up and administering a variety of trust structures. It can also provide support and advice to trustees with their own administration processes.