HMRC’s Trust Registration Service

With a registration deadline looming, and urgent action needed, check now: could the Trust Registration Service (TRS) impact you?

Part of a European initiative to tackle money laundering and the financing of terrorism, the rules around the TRS now have consequences for many more trusts and trustees than originally anticipated. This means trustees able to disregard the requirements previously should reassess their position.

Initially, the requirement was for all express trusts with a UK tax liability to register with the TRS. An ‘express trust’, according to HMRC, is a trust deliberately created by a settlor, usually in the form of a document such as a written deed or declaration of trust, rather than, for example, one created by an act of law.

The requirement now, however, is for all UK express trusts to register, whether they have a tax liability or not. The only opt-out is if they fall within specific exclusions. Exclusions cover express trusts considered lower risk by HMRC, such as charitable trusts. Even trusts in the excluded categories, though, must register if they have a liability to UK tax. There are also provisions for non-UK trusts: if this is of relevance to you, we can advise further.

In an administrative quirk, trusts in existence on 6 October 2020, but which have since been wound up, are also within scope. Such trusts must register and then be removed from the register.

We recommend taking stock now. Is it possible that you have been involved in setting up a trust, or acting as a trustee in the past? What constitutes a trust is not always intuitive. Some arrangements may not immediately spring to mind as being in the trust category, such as opening a cash deposit account for a minor. In fact, this could constitute a bare trust: although the good news is that this is one of the TRS exclusions. Investments such as stocks and shares held on trust for the benefit of a minor, on the other hand, are not excluded. For the avoidance of doubt, the rules do not apply to Child Trust Funds, nor Junior ISAs.

The deadline to register non-taxable trusts created on or before 6 October 2020 is 1 September 2022. Non-taxable trusts created after 6 October 2020 must be registered within 90 days of their creation or becoming liable for tax, or by 1 September 2022 (whichever is later). Please remember we are on hand to assist with the registration process and advise on the information needed to do so.