Date23 Apr 2021
CategoryTax, Private Client
New rules were introduced on 6 October 2020, which extend the scope of the trust register to all UK express trusts and some non-UK trusts, regardless of whether the trust has to pay any tax, but with some specific exclusions.
The new rules were introduced as part of the UK’s implementation of the Fifth Money Laundering Directive to ensure that the UK has an anti-money laundering and counter terrorist financing regime that is up to date, effective and proportionate, and improved transparency about the ownership of assets held in trusts.
At present, trustees cannot register trusts under the new rules as the TRS service is being updated. It is expected that the new TRS service will be ready later in 2021. Currently, the deadline for registration is 10 March 2022, however it is expected that this will be extended to 12 months from the date that the new TRS service is available.
Once the new TRS service is available, a 30-day deadline will apply for new trust registration and updating information on the register. This note is by no means exhaustive and the main purpose is to outline who will be required to register based on HMRC’s current guidance. It is also necessary to note that the government is still exploring remaining policy issues in this area and therefore further changes and announcements are likely.
Certain express trusts are set up for a very limited purpose and their nature is such that they are unlikely to be used for money laundering or terrorist financing. Such trusts are specifically excluded from having to register unless they are liable to pay UK tax.
The following types of trusts will be exempt from registration on the TRS:
The list of exemptions does not however include bare trusts and some important changes to note are as follows:
Any other trust set up to hold property, unless it falls within one of the ‘out of scope’ categories listed above, will need to be registered on the TRS. This includes any non-UK trust that acquires land or property in the UK, however these trusts will be on the register but will not be subject to the third-party data sharing provisions unless required elsewhere.
Non-UK trusts will only be required to register on entering a business relationship with a UK obliged entity if the trust has at least one UK resident trustee. This means that non-UK trusts with no UK resident trustees will not be required to register if their only link to the UK is through a business relationship with a UK based adviser.
If the trust has been registered under 5MLD in an EU Member State already, it should not be required to register again via the TRS. However, taxable trusts will still need to register on the TRS.
Provision of information
All trusts within the scope of registration will have to provide information on each beneficiary including their name, address, nationality and details of their beneficial interest in the trust. Further information will be required for taxable relevant trusts.
It is anticipated that the register will not be fully publicly accessible.
Registration deadlines (possibly subject to change)
For all types of trust, the TRS must be updated with any changes within 30 days of the date of the change.
There may be penalties for non-compliance and we can provide further details on the proposed penalty regime if required.
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