Best Tax Services Ltd
UKHMRCtrustregistrationservice
The following is an up to date summary of the trust register service (TRS) from HMRC(UK register of beneficial ownership of trusts)
Update dated 21 October 2019
This is an update directly taken from STEP - Society of Trusts and Estate practitioners
It has come to STEP’s attention that in HMRC’s GOV.UK guidance on how to register a trust, the guidance about which beneficiaries need to be registered on the Trust Registration Service (TRS) differed in certain important respects from the HMRC guidance that was published on 22 November 2017.
For example, the GOV.UK guidance said: ‘When a member of a class becomes known they must be named, even if they have not benefited yet’, whereas HMRC’s 22 November 2017 guidance said: ‘…But where a beneficiary is un-named, being only part of a class of beneficiaries, a trustee will only need to disclose the identities of the beneficiary when they receive a financial or non-financial benefit…’.
STEP contacted HMRC about this discrepancy and it confirmed that the 22 November 2017 HMRC guidance ‘is still current and correctly reflects the requirement for trustees to disclose details of the identity of all named/known beneficiaries.’ HMRC has since made amendments to the GOV.UK guidance with regard to which beneficiaries must be disclosed.
HMRC also confirmed that although the GOV.UK guidance states that trusts that have registered for FATCA/CRS do not need to be registered on TRS, this is not accurate. The inaccuracy reportedly results from an incorrect transposition of guidance that was in the August 2018 Trusts and Estates Newsletter, which referred to trusts that need to report under FATCA or CRS that don’t have a Unique Taxpayer Reference (UTR). To date, however, HMRC has not amended the GOV.UK guidance in this regard and STEP will be taking up this issue with HMRC.
Update dated 23 November 2017
Further to my update of 19th October 2017.
I attended the HMRC agent's webinar on 17th November 2017. There seemed to be a general uncertainty around the IHT position for a trust who owned a UK property via an underlying company ie. if the trust would need to register for TRS.
HMRC's Q&A released on 9th October 2017 did not clarify this point then.
HMRC during the webinar have clarified that any foreign trust holding a UK residential property either directly or via an underlying company is liable to IHT, therefore, will need to register for the TRS on Jan 31, following the tax year in which IHT is chargeable.
The first registration deadline is for trusts whose chargeable IHT events occurred in 2016/17 i.e. 6th April 2016 to 5th Apri 2017, the TRS deadline is Jan 31, 2018
Note:
I understand that non-UK agents of trustees have not been given access to the agents portal yet. All foreign trustees will need to individually register each trust.
If needed, I can assist with the registration as I am able to register a trust via my firm's UK agent account. It has been quite frustrating as there has been a lot of IT glitches with HMRC. The system now seems to be working or at least doing what its supposed to do!.
Update dated 19 October 2017
Background – HMRC's digital strategy
As part of HMRC's wider digital strategy, it is removing the ability for trustees to register and update trust records with HMRC in a paper format, such as via the trust tax return.
Trust Registration Service – new online system
It replaces the 41G paper form which was withdrawn at the end of April 2017 and complies with the changes to the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (SI 2017/692).
This online system requires trustees to report the trust details to HMRC and update the register annually
New legislation, much of which came into force on 26 June 2017, requires trustees to hold accurate and up-to-date information on their trusts’ beneficial owners, including settlors, trustees, beneficiaries (including any potential beneficiaries) and any persons exercising effective control over the trust (e.g. protectors).
This information will also need to be submitted to HMRC in order to be added to a new online trusts register (which will not be public but will be accessible by law enforcement bodies including police forces and the NCA).
Under the terms of the legislation the following organisations are deemed as the UK law enforcement authorities who HMRC can share the data contained in the TRS:
Financial Conduct Authority (FCA)
National Crime Agency (NCA)
the police forces maintained under section 2 of the Police Act 1996(a)
the Police of the Metropolis
the Police for the City of London
the Police Service of Scotland
the Police Service of Northern Ireland
the Serious Fraud Office (SFO)
The online register was launched on 10 July 2017 with the service currently only available to individual trustees. Agents are to be given access later in 2017. (access to agents via agent's platform has now been granted)
Which trusts need to be registered?
The reporting obligations apply to:
- UK trusts
- Non-UK trusts which have a liability to certain UK taxes in relation to UK source income or UK situs assets. (regardless of the domicile status of the settlor)
The relevant UK taxes for the purposes of non-UK trusts are:
• income tax,
• capital gains tax (including non-resident capital gains tax),
• inheritance tax,
• stamp duty land tax and
• Land and Buildings Transaction Tax
• stamp duty reserve tax.
The legislation suggests that holding UK situs assets indirectly (e.g. via a wholly owned non-UK company) will not be enough to bring a trust within the registration regime unless and until the trustee has some form of UK tax liability in relation to those assets. However, this and various other points are currently unclear.
What do trustees need to do?
Trustees falling within the scope of the new rules must:
• obtain and hold certain information about the trust and its beneficial owners as summarised below
• register the trust and the required information with HMRC
• update the trust register each year to ensure that it is kept accurate and up to date.
What will go onto the Register?
Trustees will need to provide information about the trust and its beneficial owners including:
• details about the trust itself, including: the name of the trust, the date on which it was established, and where it is resident and administered
• details of the trust’s assets: including a statement of accounts and valuations for each category of trust assets;
(see note 1 below)
• the name of any paid legal, financial or tax advisers
• the identity of the settlor, trustees, beneficiaries (including any potential beneficiaries for eg. who may have been referred to in the letter of wishes ) and any persons exercising effective control over the trust (e.g. protectors).
*An individual will be treated as having ‘control’ over the trust if, for example, he has power to add or remove beneficiaries, or appoint or remove trustees, or power to withhold consent to or veto trust distributions, or amendments to the trust.
The information to be submitted in relation to individuals will include their:
• full name
• date of birth
• national insurance number or unique taxpayer reference (UTR) (if they have one) or their usual residential address if they do not
• passport or ID card number if they do not have a national insurance number or UTR and the residential address provided is not in the UK.
When do trusts need to be registered?
Trustees subject to the reporting obligations should act now to acquire the relevant information. In accordance with current HMRC guidance reporting deadlines are:
• 31 January 2018 for trusts "set up" or starting to make income or chargeable gains prior to 6 April 2016
• 5 October 2017 for trusts "set up" or starting to make income or chargeable gains between 6 April 2016 and 5 April 2017
• 5 October 2018 for trusts "set up" or starting to make income or chargeable gains between 6 April 2017 and 5 April 2018.
HMRC has stated that registration must be completed by 5 October of the tax year after a trust is "set up" or after a trust starts to make income or chargeable gains, if that is later. This corresponds to the deadline for notifying HMRC of liability to income tax and capital gains tax where there is no current notice requiring a tax return.
Extended deadline for self-assessment registration
Trusts and complex estates first liable to self-assessment in 2016-17 would usually need to register by 5 October 2017. Due to the delays in agent access to the TRS, HMRC have extended the registration deadline to 5 December 2017 for this year only.
What are the consequences of breaching the rules?
Trustees who fail to comply with the disclosure requirements risk both fines and conviction of criminal offences.
If trustees fail to maintain an accurate and up-do-date record of beneficial owners, or provide HMRC with the required information, HMRC can impose a penalty and publish a statement about the failure. The trustees will also be guilty of a criminal offence, punishable by imprisonment for up to 2 years or a fine (or both).
Further notes:
Initially not available to agents, they will be able to register on behalf of trustees before October 2017. By early 2018 agents and lead trustees will be able to make variations to trusts if they need to report a change of circumstance.
All new trusts with a tax consequence need to be registered by 5 October 2017. Those already operating must provide additional information by 31 January 2018 through the new service to comply with the self-assessment deadline. As a concession, HMRC has confirmed it will not penalise anyone as long as they register by 5 December 2017.
While the extension for registration for self-assessment is to be welcomed, many agents will still have a significant challenge to gather the detailed information required and submit it by the 31 January deadline, alongside existing self-assessment obligations. Furthermore, some aspects of the process still need clarification.
Compliance will be a substantial exercise, therefore trustees need to be aware of their additional responsibilities and the importance of communicating changes to beneficiaries and family situations to professional advisers promptly.
Note 1:
Based on what we understand (as at 19th October 2017), for situations where non-resident trusts have UK and non-UK assets, details of ALL assets is required.
It is also understood that details of HISTORIC assets are also required i.e. Assets initially settled.
- if the trust holds any property the address of that property must be given.
Note 2:
It is expected that non-UK resident trusts which hold UK assets indirectly through a non-UK registered company should not be subject to the new rules.
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