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ies won\u2019t apply for those who fail to register in time, it has said that they will penalise deliberate or subsequent failures.\u00a0 The number of trusts registered to date is considerably lower than the anticipated total number implying that many lay trustees are unaware or have yet to register.\u00a0 Given many of these trusts have been set up by grandparents with a view to paying for school fees<\/a>, or as part of estate planning it is not unreasonable for them to believe that they need have no more involvement in the administration of the trust.<\/p>\nTrust Registration Service: What has changed?<\/strong><\/p>\n Under the Fifth Money Laundering Directive (5MLD), the requirement for trusts to be registered under the Trust Registration Service (TRS) has been expanded and this came into force on 6 October 2020. Previously, the position was that only trusts which had a tax liability were required to register under the TRS. The scope for this has now been extended to include all UK trusts \u2013 even those without UK tax liability as well some non-UK trusts. This is because the reforms are aimed at tackling money laundering.<\/p>\n Which trusts are required to register?<\/strong><\/p>\n What is a business relationship with a relevant person?<\/em><\/p>\n A business\/professional\/commercial relationship with a UK relevant person which has an element of duration,\u00a0 i.e., an on-going relationship that is expected to last for more than 12 months and not a one-off transaction.<\/p>\n UK relevant person includes but is not limited to financial advisor\/solicitor\/accountant\/estate agent.<\/p>\n Taxes include:<\/p>\n Are any trusts excluded from registration?<\/strong><\/p>\n Certain trusts are specifically excluded from registering the trust under the TRS as they are considered to be lower risk for money laundering or terrorist financing due to other registration and regulatory requirements. A full list of exclusions is outlined in HMRC’s TRS manual TRSM23000.<\/p>\n It is important to note that an express trust could be excluded from registration but may be registerable as a taxable trust if it has a UK tax liability.<\/p>\n Do bare trusts need to register?<\/strong><\/p>\n This seems to be an area of confusion as children\u2019s bank accounts held under a bare trust arrangement are excluded.\u00a0 However, any bare trusts that hold stocks and shares are now required to be registered.<\/p>\n What are key deadline dates?<\/strong><\/p>\n Registerable express trusts<\/u><\/em><\/p>\n Express trusts which came into existence before 3 June 2022 will need to register by 1 September 2022.<\/p>\n Express trusts created on or after 3 June 2022 will need to register within 90 days of their creation.<\/p>\n Any express trust which existed as of 6 October 2020 but has or will cease before 1 September 2022 will also need to be registered and then closed on the TRS.<\/p>\n Registerable taxable trusts<\/u><\/em><\/p>\n For taxable trusts, the deadline dates are as follows:<\/p>\n 5 October following the end of the tax year in which the trust incurs an income tax or capital gains tax liability.<\/p>\n or<\/p>\n 31 January following the end of the tax year in which the trust had a liability to UK taxation not mentioned above.<\/p>\n Any taxable trusts which ceased before 28 August 2020 are not required to register under the TRS, the trustees can advise HMRC by letter or via the self-assessment return.<\/p>\n Any changes or updates required to an existing registered trust (taxable or express) must be undertaken within 90 days from the date the trustees became aware of the change.<\/p>\n Failure to register or keep TRS up to date.<\/strong><\/p>\n As the trust registration requirement is a new and unfamiliar obligation for many trustees, HMRC will not automatically issue penalties for failing to register or update records. However, if trustees fail to take action when contacted by HMRC or if they conceal trust data, penalties will be imposed. Common situations where this could arise include:<\/p>\n In these cases, HMRC may issue a warning letter to the trustees or their agent. If the warning letter is ignored or the information is not updated within the specified period, a penalty of \u00a35,000 may be issued to the lead trustee.<\/p>\n Who is at risk of getting penalised by the changes to the TRS requirements?<\/strong><\/p>\n Trustees should be aware that some express trusts could be listed as excluded from registration but could be registerable as a taxable trust (i.e., if there is a UK tax liability).<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" There is much confusion about who the new requirements to register trusts apply to.\u00a0 Much has been written about the fact that lay trustees such as parents and grandparents are at risk of missing or falling foul of the new requirements. Whilst HMRC are saying that penalties won\u2019t apply for those who fail to register[…] <\/p>\n\n
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