The Trust Registration Service (TRS) is essentially a register of the beneficial ownership of trusts, part of the EU AML Directive. It enables trustees to meet their legal obligations under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations that were introduced on 26 June 2017. Any relevant trust must be registered by 1 September 2022 via the HMRC Government Gateway. When the trust register was first introduced such formal compliance only related to trusts with a duty to satisfy a liability to UK taxation, meaning that there was no need for registration if the trust did not have tax to pay.
Significant changes were made to legislation on October 6 2020 and formal compliance is now also required for a trust established by written deed, with few exceptions
There is a deadline of September 1 2022 for the registration of all non-exempt trust arrangements in place after October 6 2020 (whether they have since ended or not), and this is extended to 90 days after the creation of any registrable trust arrangements set up after May 31 2022. The 90-day deadline applies for keeping the trust’s details up to date on the register, for example a change of trustees/beneficiaries or their contact details.
A trust arrangement is typically where individuals have the legal ownership of assets but hold this for the benefit of others. Typical examples that now need to be registered include trusts where a property has been left to a spouse to occupy for life under the will of their deceased partner; where an individual has investment bonds which — perhaps unbeknown to them — are written into trust; private company shares held in trust, as part of a tax planning arrangement; or, more simply, where a grandparent is holding shares as a nominee for their grandchildren.
The list of the types of trust arrangements exempt from registration and which are most commonly applicable to private individuals is long. It includes charitable trusts, bank accounts or stocks and shares Isas for minors, property/land co-owned but where the beneficiaries and trustees are the same persons, will trusts closed within two years of the date of death of the testator/testatrix. It also includes trusts where a disabled person is the beneficiary, trusts arising from insurance policies and compensation payouts and trusts imposed by legislation or a court order. Trusts can only be exempt if there is no UK tax liability.
HMRC continues to provide updates on exemptions, but there is no comprehensive list. It will begin issuing penalties in September for non-compliance, which will be £100 for missing the deadline, a further £200 penalty if three to six months late, and then the greater of 5 per cent of the trust’s tax liability or £300 if more than six months late.
Individuals that might be affected by these changes should in the first instance consult HMRC’s online trust registration guidance, but where assistance is needed they should contact a suitably qualified tax adviser as soon as possible so that they remain compliant and avoid any penalties.
GSI has contracted Beyond Wills Solicitors who are able to process TRS Compliance at £197 + VAT per trust with a maximum of 3 trustees. An additional fee of £7 + VAT will apply for each extra trustee per trust.
This article was adapted from comments by R Ragunathan of Kreston Reeves and Beyond Wills Solicitors