HMRC Trust Registration Service - The Deadline Is Approaching
You may be aware that HM Revenue and Customs operates a register of the beneficial ownership of trusts, called the Trust Registration Service.
The Trust Registration Service ('TRS') was created in 2017, following the implementation of the Fourth Anti-Money Laundering Directive. The Fourth Anti-Money Laundering Directive requires the trustees of any trust that pays tax of any kind (such as income tax, or capital gains tax) to register the trust on the TRS.
On 6 October 2020, new rules were introduced following the implementation of the Fifth Anti-Money Laundering Directive. The Fifth Anti-Money Laundering Directive does not replace the Fourth Anti-Money Laundering Directive, but it extends the requirements for registration of trusts so that all 'registerable express trusts' now need to be registered, even if the trustees do not have a tax liability. HMRC defines a 'registerable express trust' as a trust that is deliberately created by a settlor (either to take effect during the settlor's lifetime or by their will, to take effect on their death).
A limited number of types of trust are excluded from registration. Details of these trusts can be found here.
The list of trusts that are excluded from the requirement to register is narrow, which means that significantly more trusts will now need to register with the TRS. As an example, trusts of jointly held property are excluded from registration only if the trustees and the beneficiaries of the trust are the same people. This means that if you are the registered legal owner of a property but you are not also a beneficial owner of that property (because you hold it as nominee for someone else), the trust will need to be registered on the TRS. Even if there is just one beneficiary who is not also a registered owner/trustee, the trust must be registered.
The legislation is retrospective. This means that if the trust existed on 6 October 2020 and unless it falls within any of the categories of excluded trusts, the trust will need to be registered on the TRS. This is the case even if the trust existed on 6 October 2020 but has subsequently been wound-up. Likewise, if a trust was created many years ago and is on-going, the trust will need to be registered (unless it is excluded).
The deadline to register existing trusts that fall within the scope of the Fifth Anti-Money Laundering Directive is 1 September 2022.