The Trust Registration Service is now open for non-taxable trusts to register, as required by the UK’s implementation of the EU Fifth Anti-Money Laundering Directive.
All relevant trusts that were in existence on or after 6 October 2020 must be registered by 1 September 2022. The obligation extends to all UK express trusts and some non-UK express trusts unless the trust is of a type specifically excluded by HMRC’s guidance. Excluded trusts include life policies or pensions written into trust, UK-registered charities, will trusts that are limited to two years and trusts for bereaved children.
For trusts created after 1 September 2022, the original intention was that they would be required to register within 30 days of their creation. However, HMRC has also increased the 30-day time limit to 90 days. The same limit will apply to the obligation to update trust information that was already on the register at 1 September 2022. The current legislation will be amended shortly to reflect the extended time limit.
The wide scope of the registration requirement has given rise to concerns that many trustees will be caught out.
“What constitutes a trust arrangement under the TRS may no longer correlate with what an individual would consider to be a trust,”
comments Joan Foster, Partner at tax advisors RSM UK.
“Some arrangements popular among parents and grandparents, such as bare trusts and bank accounts held for minors, are not exempt. This means they need to register those trusts.”
Trusts of land where the trustees and beneficiaries are the same persons are, in general, exempt.
“(However) it remains unclear whether other joint property holding arrangements, including those where more than four individuals have a joint interest in a property or tenancy agreement, are covered by the exemption or not,”
says Foster.
She notes that a lack of understanding of obligations is not a defence for failing to comply, adding that lack of awareness, and consequently lack of action, may lead to more people being handed penalties.
This article was first published by STEP on Thursday 2nd September
