Although David Cameron will be remembered for inadvertently leading the UK out of Europe, in early 2016 he hit the headlines over revelations about his family’s connections to offshore trusts. He was criticised for having lobbied against tightening anti-money laundering rules for trusts, but this fell on deaf ears in the EU, which has issued its 4th Anti-Money Laundering directive. On 26 June 2017 the UK implemented this, primarily in the form of a compulsory trusts register administered by HMRC.
What is the trusts register?
The trusts register is an annual reporting requirement for all trusts, anywhere in the world, in a year when the trustees are liable to tax. Generally this is where a UK trust tax return should be filed, but it also if inheritance tax or stamp duty arises.
What needs to be reported?
Trustees must report annually on the assets held in the trust, and details of the settlors, trustees and beneficiaries. This includes full names, dates of birth, tax reference numbers and in some cases home addresses.
Who can see the information?
Any UK law enforcement authority, including HMRC, the FCA, the Serious Fraud Office and the police, can see the register. However, there are proposals to make it public in the future.
How does this affect me?
Settlors and beneficiaries are being put in the spotlight, but the obligation falls on trustees and failure to report can result in two years in jail. In seeking to shine a light on murkier areas, the EU has placed a heavy burden on them.