New rules came into force in October 2020. Under these rules, all UK trusts (apart from a few exceptions) and some non-UK trusts in existence on or after 6 October 2020 are now required to register with HM Revenue & Customs (HMRC) using the TRS by 1 September 2022, regardless of whether or not they are liable to pay any UK tax. This extends to trusts that were in existence on 6 October 2020, but have since been closed down since that date.
The data on TRS is only available to those with a ‘legitimate interest’, such as law enforcement agencies investigating money laundering and the financing of terrorist activities.
What are the deadlines for trust registration and updating the TRS?
The deadline and timescales for the registration of existing or new trusts are:
Non-taxable trusts in existence on or after 6 October 2020 must be registered by 1 September 2022 (even if they are now closed).
Non-taxable trusts created after September 2022 must be registered within 90 days.
Changes to the trust details or circumstances must be registered within 90 days of the change.
Personal representatives (those responsible for managing the deceased’s estate) need to register with HMRC by 5 October after the tax year when the estate starts to receive income or has chargeable gains on which tax is payable if the estate is classed as complex and/or been administered for over two years.
The registration deadline for taxable relevant trusts set up before 6 April 2021 is on or before 31 January after the tax year in which the tax liability occurred (or by 5 October after the end of the tax year for a first-time liability to income tax or capital gains tax).
For trusts set up after 5 April 2021 the deadline has been extended to 1 September 2022. Taxable relevant trusts set up on or after 4 June 2022 must be registered within 90 days of the trustees becoming liable to pay UK taxes. This also applies to non-taxable trusts. Once a trust is registered on the TRS the trustees will have 90 days from becoming aware of any changes to update the register.
Which trusts are excluded from the TRS?
The full list of trusts not required to register can be found on GOV.UK.
Trusts excluded from the requirement to register, include:
will trusts that are wound up within two years of death
policy trusts paying out on death or critical illness
existing trusts with a value of less than £100 created prior to 6 October 2020
How do I register a trust with the TRS?
The lead trustee can register the trust on GOV.UK. However, guidance suggests that it can be beneficial to appoint an experienced trust administrator specifically trained to gather the information required to complete the TRS process and to register the trust.
What are a trustee’s responsibilities?
Legal responsibility for registration falls on the trustees. It is for the trustees of a trust to decide upon and appoint a lead trustee to do this. Alternatively, trustees can appoint an agent, such as a solicitor, to register the trust.
The trustees are required to keep accurate and up-to-date written records of the beneficial owners, including settlors (the persons who established the trust), trustees, and beneficiaries. The lead trustee is also obliged to keep the register updated each year or when certain specific events occur. HMRC may impose penalties and fines for non-compliance on trustees who fail to comply with the registration requirements.
In addition, trustees must register ‘complex estates’ on the TRS, which are an estate where:
the total tax liability (income tax plus capital gains) for the entire administration period exceeds £10,000
the probate gross value exceeds £2.5 million
the value of the assets sold by the personal representative in any one tax year exceeds £500,000
What information is required to register the trust?
Trustees must enter details about:
A complete list of what information is needed is available on GOV.UK.
What happens if you do not register a trust with the TRS?
There is a legal obligation for trustees to register the trust, but some trusts are exempted from doing so. If you do not register your trust or keep the details on the register up to date, HMRC enforces penalties.
It’s proposed that these penalties are not as severe as the self-assessment penalty regime, and that ‘nudge letters’ will be sent for first offences with a proposed penalty of £100 for any subsequent offences.
There will be a similar appeals process to the self-assessment regime. HMRC will enforce more stringent penalties if trustees deliberately ignore the registration requirements.
What if the trust does not hold any cash to pay fees or penalties?
It is the trustees’ responsibility to register the trust and keep it up to date. The trustees can appoint an agent to do this on their behalf but there will be a cost to do this. If the trust does not hold cash to pay for this, the trustee or beneficiary can lend money to the trust.
Do I need to list all beneficiaries?
HMRC wants an accurate picture of who can benefit from a trust. Where a beneficiary is named on a trust instrument – separate from members of a named class – they can clearly be determined, and trustees must provide the relevant information.
Where a beneficiary is un-named – being only part of a class of persons – a trustee will only need to disclose the identities of the beneficiary when they receive a financial or non-financial benefit from the trust.
Consideration should be given in future drafting to reduce the number of named beneficiaries in deeds where possible.
What trust changes must be recorded on TRS?
The register must be updated if the trust becomes liable to income tax trust or capital gains tax, or if there are any changes to trustees’, beneficiaries’ or settlors’ details. Changes must be recorded on TRS within 90 days to avoid fines and penalties.
Do offshore trusts have to be registered with TRS?
Offshore trusts must be registered if they acquire land or property in the UK or if they have at least one UK resident trustee. However, trusts already registered in another EU Member State are automatically exempt from UK registration.
Do all estates need to register on the TRS?
Estates in administration for more than two years, and complex estates, need to register on the TRS. A complex estate is an estate that does not meet the conditions for using the informal payment procedures. In estates where there are underlying trusts, the dates for registration vary so it is advisable to seek professional legal advice.
Who can ask to see details on the TRS?
Details of the register will only be released in certain circumstances to those with a ‘legitimate interest’, such as law enforcement agencies where there is evidence of money laundering or terrorist financing activity.
Beneficiary information will not be disclosed if there is a risk of fraud, kidnapping, blackmail, extortion, harassment, violence, or intimidation, or where a beneficiary is a minor, or otherwise legally incapable.
Who do you need to tell that the trust is registered with the TRS?
Third parties are required to have formal confirmation that the trust is registered and up to date on TRS before they can act for you. For example, if you wish to sell a trust property the estate agent and conveyancer will need to see evidence in the form of a certificate downloaded from the register.
How can Maitland Walker LLP assist you?
We are able to act on behalf of trustees to register their trusts. We can also act on behalf of the trustees in managing their trusts. The process involves us first registering the trust on the TRS in order to obtain either a trust UTR (if the trust is liable to pay UK tax) or a URN (if the trust does not have to pay UK tax). HMRC will then issue this UTR/URN to the lead trustee of the trust, usually within 15 working days. If the trustees then want us to view or make changes to a trust’s registration details on their behalf, the lead trustee will need to authorise us to manage the trust’s details for them. This involves the lead trustee registering for an Organisation Government Gateway user ID for the trust. This is something that the lead trustee must address personally, but we are able to assist with the process and guide them through it if necessary. This will also involve the lead trustee having to answer some questions about the trust if it was registered by us in order to claim the trust and to link it to their Government Gateway user ID.
Once the lead trustee has claimed the trust, they can then tell us so that we can sign into our online account and create a request authorisation link that we will email to the lead trustee. They can then select the link and sign in with the same Organisation Government Gateway user ID and password used to claim the trust. They will then be able to authorise Maitland Walker LLP as their agent to manage the trust on behalf of the trustees.
In most cases, we will be able to register a trust on the TRS and obtain a trust UTR/URN for the trust for a fixed fee of £400 plus VAT.
If the lead trustee also wants us to assist them in obtaining an Organisation Government Gateway user ID for the trust and/or they wish to authorise us to access and manage the trust’s details as their agent then additional costs will be incurred on a time costs basis. These will vary, depending on the level of assistance required by the lead trustee to obtain an Organisation Government Gateway user ID for the trust and on the ongoing trust management requirements. We will be able to provide an estimate of these charges once we have gathered preliminary information from the trustees about a trust.
If you wish to instruct us
If you wish to instruct us to register your trust and/or manage it, then please contact James Ashby in our Taunton office as soon as possible to let him know.
James will then arrange to provide you with a letter of appointment and a TRS questionnaire to complete and return so that he can then make a start on registering your trust. Please note that all of the trustees will need to instruct us before we can act. They will also need to decide who is to act as lead trustee. Our view is that this role should be assigned to the most IT literate trustee, as the process involved in registering for an Organisation Government Gateway user ID is quite involved.
You will note that HMRC has set a deadline of 1 September 2022 for the registration of registrable express trusts in existence on or after 6 October 2020. It is important therefore that action is taken quickly to comply with these new obligations.
t. 01823 745777