The UK Trust Registration Service: Trustee obligations

Trustees have multiple reporting obligations that it is necessary to be aware of and comply with.

This article focuses on the Trust Registration Service. In addition to that, trustees also need to be aware of other reporting they may be required to do when they have a settlor / beneficiary who is either a US person or resident outside of the UK:

• FATCA where a trust has a US settlor / beneficiary.
• Common Reporting Standards (CRS) where there is a settlor / beneficiary resident in a participating jurisdiction.

Lastly, trustees with investment portfolios may need to register to obtain a Legal Entity Identifier (‘LEI’) code in order to deal or otherwise transact in investment holdings with any financial services provider across the EU.

Trust Registration Service (TRS)

In June 2017, the HMRC Trust Register came into effect following the adoption of the 4th Anti-Money Laundering Directive. The Trust Register was introduced to improve transparency around the beneficial ownership of assets held in trusts with trustees required to provide details of the trust itself (including its tax residence status and the assets it holds), as well as information in respect of the settlor(s), trustee(s), and potential beneficiaries. Information was then required to be kept up to date by way of an annual declaration by the trustees.

Access to TRS is restricted to government authorities and anyone with a 'legitimate interest' is able to request information, where there is evidence that it furthers work to counter money laundering or terrorist financing activity.

Who needs to report?

• UK resident trusts and non-UK trusts with a liability to UK income tax, capital gains tax, inheritance tax, Stamp Duty Land Tax, Land and Buildings Transaction Tax (Scotland), Land Transaction Tax (Wales) or Stamp Duty Reserve Tax.
• All UK express trusts that have not already registered that do not currently have a liability to UK tax unless they fall within a number of specific exemptions.
• Non-UK express trusts with at least one trustee resident in the UK that enters into a new business relationship with a UK relevant person on or after 6 October 2020.
• Non-UK express trusts that acquired an interest in UK land on or after 6 October 2020.

What is reported?

• Extensive information on the Trust, assets and ‘beneficial owners’; including the settlor, trustees, beneficiaries and individuals who have ‘control’ over the trust.
• Name, date of creation, country of tax residence and place of administration of the trust and trustees’ contact details.
• Details of the trust assets and controlling interests in other countries.
• Details of the trust’s beneficial owners.

How and when?

• To HMRC via the trustees’ or agent’s online account
• New trusts created on or after 1 September 2022 need to be registered within 90 days of being created.
• Trustees are required to maintain the TRS and make changes (such as information relating to the settlor, trustees and beneficiaries) within 90 days of the change.
• Additionally, if the trust has a tax liability for any tax year, it is necessary to declare on the trust register that the details of the persons associated with the trust are accurate and up to date. This must be done by 31 January after the end of the tax year in which the tax liability arises and the trustees will also need to tick a box when preparing the trust’s self assessment tax return to confirm that the details on the TRS are up to date.

Consequences of non-compliance

• HMRC have indicated that there will be no penalty for a first offence of failure to register or late registration of a trust unless that failure is shown to be due to deliberate behaviour on the part of the trustees.
• Where failures to register are due to deliberate behaviour on the part of the trustees, a £5,000 penalty may be charged per offence; however, penalties will be considered on a case-by-case basis.
• Similar penalties can be charged where there has been a failure to keep the TRS up to date.
• Failure to comply with UK money laundering requirements is a criminal offence
• HMRC may also impose financial penalties for late registrations.