The Trust Registration Service (TRS) is the HM Revenue & Customs (HMRC) facility, introduced in 2017, and still in need of much refinement, which serves two purposes. It applies to express trusts, (and to certain estates, too), whether resident in the UK or overseas.
The TRS purposes are as follows:
- To provide the means by which the trustees of a trust with a liability to UK income tax or capital gains tax fulfil their obligation to register with HMRC (acting in its capacity as tax authority). To this end, the TRS has replaced the longstanding form 41G, which is no longer available; and
- To provide the means by which the trustees can notify, and update as appropriate, the core details of a trust to HMRC (acting in its capacity as a supervising agency) in compliance with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations (SI 3027/692 – the 4th Money Laundering Directive.
Of these two TRS functions, the first is a one-off event, applicable only to those trusts which are not already registered with HMRC, after which the trust is given a registration number and is entered into the UK self-assessment system. Failure to register and, thereafter, to file timeous tax returns and make tax payments, exposes the trustees to the usual civil penalties.
The second function, requiring compliance with the 4th Directive, can be more onerous for the trustees to comply with. Failures in this regard can lead to the trustees being fined or criminally prosecuted.
When is registration required?
The need for registration on the TRS is triggered when a UK tax liability arises in the trust in a tax year from 2016-2017 onwards.
The liability must arise to the trust, and not to a company in which the trust has ownership.
The UK liability can be to: income tax; capital gains tax; stamp duty land tax; stamp duty reserve tax; or inheritance tax (but not an inheritance tax liability through holding shares in a company owning UK residential property).
Where the trust is not already known to HMRC, the registration should be made by the trustees by not later than 5 October following the tax year in which the UK tax liability first arises.
Where the trust is known to HMRC and, therefore, already within the self-assessment system, the registration should be made by 31 January following the tax year.
What does registration involve?
Registration requires the notification to HMRC of a wide range of information regarding the trust.
Broadly, the information is as follows:
- Name, date of creation of the trust, the country of residence and administration, and details of the present trustee(s);
- The name, address, date of birth, UK national insurance number or passport number for: the settlor(s); named beneficiaries; and protector or other controlling persons;
- Details of the assets, and their value, at the time they were settled; and
- Details for the trust’s legal, financial, and tax advisers, where applicable.
Once the core information for the trust has been entered on the TRS, any subsequent changes to that information will fall to be made on the register by the 31 January following the tax year in which the change occurred if a UK tax liability also arose in that particular tax year. If no UK tax liability arose in that tax year, the changes need to be made to the register by the 31 January following the next tax year in which the trust does have such a liability. (Presently, the functionality of the TRS does not allow for changes to be notified and it is expected that trustees will not be penalised for the absence of updating until the TRS is upgraded accordingly.)
To whom is the trust information available?
Whilst automatically being available to HMRC, the details on the register can also be made available to: the National Crime Agency; the Serious Fraud Office; the police; and the Financial Conduct Authority. The information can also be shared with equivalent law enforcement agencies in Europe.
Presently, the information cannot be accessed by members of the public, although there must be a possibility that this will happen in the coming years.