Major changes are being made to the Trust Registration Service (TRS) relevant for anyone who does trust work. These are twofold, first the large extension of the TRS to include all express trusts unless specifically excluded, and the introduction of 5MLD (5th Money Laundering Directive).
The second change being developments of the existing process for those trusts (the ones with tax liabilities) that are already required to register on the TRS.
Regulations for 5MLD, relating to the TRS, were laid before Parliament on 15 September, and should come into effect on 6 October. This requires a large range of new trusts (even if they have no tax liability and therefore no need to be registered yet ) to register with the TRS within 30 days of creation or, if later, by 10 March 2022. Those already in existence need to be registered by 10 March 2022. Helpful changes have been made to allow all trusts that arise on death, by will or intestacy, a breathing space of two years before they need to register. Some are excluded from the need to register but it’s a little random and technical. We’ll cover the details of those changes in a later issue of A Moment of Clarity. We’re currently awaiting news on the guidance that HMRC intends to give, which we hope will help clear up some details.
HMRC are also updating their online systems to enable these new trusts to be registered. Currently it seems that the process hasn’t caught up with the technical change in the law.
Meanwhile, let’s consider the significant developments with the trusts already on the system, those with any form of tax liability - Inheritance Tax, Capital Gains Tax, Income Tax, Stamp Duty Land Tax or Stamp Duty Reserve Tax.
Updating trust details:
You can now update details on the Trust Register if any of the information about the trust, or the beneficial owners, you gave at registration changes. You must update this if the trust is liable to tax – if there's no liability this tax year, you don’t need to update it until there’s a liability.
This includes changes to trustees, beneficiaries, settlor, protector or any other individual who can control the trust. The very limited changes that used to need notification in writing (changes to lead trustee or change of address) can now be done online. You don’t need to update on changes to the assets in the trust, or their values which you gave at registration. The updates that are required are more significant.
As the online update functions are now available on the TRS, all trustees need to make sure the details on the register are correct, and that any changes to the relevant people are updated on the system.
Trustees that deal with trusts through an agent now need to authorise the agent to update the trust register on their behalf. This is dealt with through the trustee’s personal government gateway account via a link sent by the agent.
Annual Declaration needed, if tax due in that year:
You’re now required to make a declaration on the TRS to confirm the details of the people associated with the trust are accurate and up-to-date. You have to do this even if there aren’t any changes, if the trust is liable for one or more of the relevant taxes for that tax year. You can do this online. If the trust isn’t liable to pay tax that tax year, the declaration doesn’t need to be made until the trust becomes liable to tax again.
These changes may seem very techy but they’re important to making trusts work in practice. While it may seem trusts are being subjected excessively to the “MLD sledgehammer” to crack this nut, the new rules still need to be followed.
Trust and Tax law is complicated and changes regularly, so it’s important to make sure you get the right advice when you need it. We have unsurpassed experience with all aspects of trust law and taxation, so we can offer practical, tax-efficient advice on the creating, administering, changing and ending your trust.
Whether you hold assets in the UK or internationally, the comprehensive legal knowledge of our specialists can help. To learn more, click here.
Published: September 2020
A monthly briefing from Irwin Mitchell
September 2020
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