Trust Registration Service – an overview
HMRC’s new online Trusts Registration Service (TRS) was launched in July 2017. This new online facility was introduced partly to implement new regulations relating to the UK’s anti-money laundering and counter-terrorist financing regime, and partly to extend HMRC’s digital remit in the age of tax transparency, although it has not been without its technical glitches thus far.
With effect from May last year, Form 41G became redundant and was replaced by the TRS online portal which is now used to register trusts and estates for reporting purposes. The TRS includes a register of beneficial ownership and the means for trustees to register trusts with HMRC for the purposes of obtaining a Unique Taxpayer Reference (UTR) and delivering tax returns.
Access to the Register
Most law enforcement authorities, such as the Financial Conduct Authority and the National Crime Agency, are now able to inspect the TRS. Apart from that however, the TRS will be private for the foreseeable future. The EU’s legislature is currently debating a directive, which (if enacted) would require all such registers to be made public.
Obligation to register
All trusts with any of the following UK tax liabilities in a given tax year must register with HMRC:
- Income tax
- Capital gains tax (CGT)
- Inheritance tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax
The requirement to register applies to UK trusts and non-UK resident trusts which have a UK source of income or assets located in the UK. Compliance with the online registration obligations is mandatory even if the trustees have previously submitted Form 41G, obtained a UTR and paid tax.
The TRS is not currently available to overseas agents although it is anticipated that they will be able to access the facility by late summer 2018.
The deadlines for first registration with the TRS vary depending on whether or not the trust has previously been registered for Self Assessment under the old rules. Extensions to the registration deadlines in the first year of the TRS were granted by HMRC, in response to feedback about initial difficulties with the new service and the pressures being put on agents at a very busy time.
Where a trust is not already registered with HMRC and has an income tax or CGT liability for the first time:
- the trustees must register online by 5 October after the end of the relevant tax year (i.e. for income tax or CGT liabilities arising for the first time in 2017–18 the deadline is 5 October 2018).
- HMRC confirmed that in the first year of the TRS, in order to allow sufficient time for trustees or their agents to complete the online registration of a trust, the deadline for registration of taxable trusts with a first time income tax or CGT liability relating to 2016–17 was extended from 5 October 2017 to 5 January 2018.
Where a trust is not already registered with HMRC and has a tax liability other than income tax or CGT for the first time;
Where a trust is already registered with HMRC under the old rules and has any tax liability:
- the deadline is 31 January following the first tax year in which the relevant tax liability arises (i.e. 31 January 2019 for liabilities arising in 2017-18).
- HMRC announced that no penalty will be imposed on the trustees of taxable relevant trusts if the trustees, or an agent acting on behalf of the trustees, failed to register on the TRS by 31 January 2018 but do so no later than 5 March 2018. The deadline for 2016–17 for trusts in these categories is effectively extended to 5 March 2018.
Penalties for non-compliance
The exact details of penalties for non-compliance are unknown at present, although it is clear that trustees may be exposed to fines or imprisonment.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.