24 August 2022
The Trust Registration Service (TRS) is an HMRC register of the beneficial ownership of trusts.
The TRS has been in existence since 2017 whereby trusts with a tax liability have been obliged to be registered. The requirement to register was extended to non-taxable trusts on 6 October 2020 as part of the UK implementation of the fifth anti-money laundering directive (5MLD).
All non-taxable express trusts, and certain non-express trusts, in existence on 6 October 2020 must register with the TRS by 1 September 2022, unless they are excluded.
What is an express trust?
An express trust is one that is intentionally created, usually via a deed, declaration of trust or a provision in a Will.
Which trusts should register?
HMRC have not provided a list of all trusts caught by the TRS, so the following is non-exhaustive:
- Lifetime trusts (both discretionary and life interest trusts)
- Will trusts in existence for more than 2 years following the date of death
- Bare trusts
- Pilot trusts created after 6 October 2020
- Complex estates
- Will Trusts created after death by a Deed of Variation
- Non-UK express trusts which acquire UK land or have at least one UK trustee and enter into a business relationship with a UK obliged entity where the trust is not an EEA registered trust
However, certain trusts are excluded:
- Trusts for Bereaved minors
- 18/25 Trusts
- UK registered Pension Schemes
- Co-owners who hold the trust for themselves e.g. joint tenants who hold land for themselves as tenants-in-common
- Children’s bank accounts
- Personal Injury payment settlements
- Charitable trusts
- Pilot trusts with a value of less than £100 created prior to 6th October 2020 (pilot trusts)
- Will trusts which conclude within 2 years of the date of death (except those created by Deed of Variation)
- Trusts that exist by operation of law / statutory trusts
Who is responsible for registration?
It is the legal responsibility of the Trustees to ensure that the trust is registered on the TRS. Non-taxable trusts, unless excluded, must be registered by 1st September 2022. Trusts created within 90 days before this deadline have 90 days to be registered. Registrable non-taxable express trusts, created after 1 September 2022 must be registered within 90 days of creation.
Crucially all registrable trusts in existence on 6 October 2020 must be registered, even if they have since ended.
For law firms where partners are trustees, there is an obligation to ensure that those trusts are registered. Where retainers are active and there is an awareness of included trusts being in existence, solicitors should inform their clients of the TRS and the need to register.
Trustees are obliged under the Money Laundering, Terrorist Financing and transfer of Funds (Information on the Payer) Regulations 2017 to keep an up-to-date written record of the beneficial owners of the trust which includes trustees, settlors, beneficiaries and anyone who has control of over the trust. The latter includes advisors providing financial, legal or tax advice to the trustees regarding the trust.
What is required for registration?
In order to register a trust on the TRS, information about the trust assets, the person who created the trust (Settlor), Trustees and Beneficiaries are required.
- Full name
- Date of birth
- Country of residence
- Country of nationality
- Role in the trust
- Mental capacity – this does not need to be formally assessed, and there is the option to choose “don’t know” which should be used for beneficiaries who are minors
Details about the trust:
- Full name of the trust
- Date it was established (for will trusts this is the Testator’s date of death not the date of the will)
- Value of the assets at the time of registration – does not need to be formally assessed or updated if it changes
- Country where the trust is administered
- Whether the trust is taxable or not
Any changes to the trust assets, trustees or beneficiaries must be updated on the TRS within 90 days from the date of change.
The trustees may appoint a lead trustee to register the trust, or they may appoint an agent to do so such as a solicitor or an accountant. If a registrable trust is not registered on the TRS within the required timeframe, HMRC may charge penalties. Penalties may also apply for failure to update the TRS.
Who can view the TRS?
The register is not openly available for inspection, only third-parties that can demonstrate a legitimate interest, such as law enforcement agencies, will be granted access to beneficial ownership information. Where a beneficiary does not have capacity, either because they are under 18 or in accordance with section 2 of the Mental Capacity Act 2005, or if there is a risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, then beneficiary information will not be disclosed.
From September 2022, when entering into a business relationship with a trust, “relevant persons” are required to check the registration of the trust with the TRS. A “relevant person” is an organisation obliged to carry out due diligence checks under the money laundering regulations, such as solicitors and accountants for example. The trustees or their agents will need to provide proof of registration with the TRS and the relevant person will have to seek to resolve any discrepancy identified when reviewing the proof of registration. If the discrepancy cannot be resolved directly then they must report the discrepancy to HMRC.
Leyla Whitlingum 24 August 2022
This article is current at the date of publication set out above and is for reference purposes only. It does not constitute legal advice and should not be relied on as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.
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