The Fifth Money Laundering Directive regulations, which came into effect on October 6, 2020 significantly extended the scope of the TRS to all UK express trusts (with a few exceptions) and some non-UK trusts, irrespective of whether the trust has a tax liability, to register with HMRC.
There are certain requirements which need to be met in respect of trusts that require registration with the TRS. These are broadly:
Certain trusts do not need to register unless they are liable to pay UK tax. Examples of these include:
Other less common types of express trusts which are set up for particular purposes are also excluded from registration unless they have to be registered because they are liable to pay tax. These are set out in the legislation and will be described in the detailed guidance.
The trustees or agents will have to register information about the persons involved in the trust such as the settlors and beneficiaries.
The information provided about each beneficial owner will be their name, month and year of birth, country of residence, nationality, and their role in the trust. For companies and other legal entities, the information will be limited to their name, registered office address and nature of their role in the trust.
Under the new rules, organisations and persons involved in preventative work in the field of anti-money laundering, counter terrorist financing and associated offences can request access to details on the register about the people associated with a trust. The information will only be released on request in certain limited circumstances.
Law enforcement agencies can already obtain information on the register about a trust and its beneficial owners to help counter money laundering and terrorist financing. The new rules will allow HMRC to give information to an outside party in specific limited circumstances. In addition, trustees will use the register to share their own information with an obliged entity.
There are two types of requests for information from the register:
HMRC will not give information about beneficial owners if they are under 18 years of age, lack mental capacity or are at risk of blackmail, extortion, violence, or intimidation as a result of releasing that information.
The registration deadline depends on when the trust was created and whether the trust needs to be registered due to it being taxable (i.e., there is a UK tax event chargeable against the trust) or non-taxable.
Registrable non-taxable express trusts that were in existence on or after October 6, 2020 must register by September 1, 2022. This includes trusts that were in existence on or after October 6, 2020 but have since ceased.
The TRS record must be kept up to date and information must be updated within 90 days of the date that the trustees become aware of changes to the trust details or beneficial ownership.
If the trust is taxable, the trustees must declare the trust is up to date on an annual basis by January 31 following the end of the tax year in which the trust has a liability to UK tax.
The penalty regime is expected to be similar to that for self-assessment commencing at £100 and increasing the longer the failure continues, although this has yet to be confirmed by HMRC.
For any trusts which are caught by the newly introduced regime, we will be in touch in the coming weeks to confirm the position and arrange for the relevant information to be submitted on the TRS where we provide trustee services.
The content of this document is intended to provide a general overview of the subject matter and should not be construed as legal advice.