Trust Registration Service

Why the Trust Registration Service exists and when to use it

May 2022

Paul Lucas

Vice President, Strategic & Technical Sales

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PART OF 50 MINS STRUCTURED CPD

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Risk Disclaimer

This content is directed only to persons having professional experience in matters relating to personal investment (investment professionals) and should not be distributed to anybody else. It has been prepared for general information purposes only. It does not constitute advice (whether investment, legal, regulatory, tax or otherwise) provided by BMO Global Asset Management (EMEA) (BMO). Certain content in this document is based on our own reading of legislation, regulation, or guidance issued by a government or regulatory authority, as at the date of publication, which is subject to ongoing change. Tax treatment is based upon individual circumstances. BMO gives no warranty or representation, whether express or implied, that such content is up to date, complete, or accurate.

Investment professionals in receipt of this document should not rely on any of its content. They remain solely responsible for advising their underlying clients in accordance with their own legal and/or regulatory obligations and for taking their own independent advice as they determine is necessary.

To the extent lawful, BMO excludes all responsibility and associated liability for any loss or damage suffered by any recipient of this document who chooses to rely on its content, whether occurring in contract, tort (including negligence), breach of statutory duty, or otherwise, even if foreseeable.

Key takeaways:

  • Understand why the Trust Registration Service exists and when to use it
  • Describe which trusts must use the service and which are exempt

Financial Planners are increasingly making use of trust based planning solutions for their clients. In many cases, the trustees are likely to be family members and inexperienced in their roles and responsibilities.

Financial Advisers play a key role in supporting lay trustees to understand their role in managing trusts efficiently and effectively.

In this article, we explore the Trust Registration Service (TRS), including when and how trustees are required to use this service.

What is the Trust Registration Service (TRS)?

The TRS was set up in response to the UK government’s obligations to have an anti-money laundering and counter terrorist financing regime as required by the 4th and 5th Money Laundering Directives.

The TRS is an online portal that provides a single route for trustees to both comply with their registration obligations and to obtain their Unique Taxpayer Reference (UTR). Trusts require a UTR to submit their self-assessment tax return and to register on the TRS.

Actual completion of a trust’s tax return is done via HMRC’s online software or on paper using SA900 and not via the TRS.

Which trusts need to register with the TRS?

When the TRS was first introduced in 2017, only “taxable relevant trusts” (broadly, UK and non-UK resident trusts with a relevant UK tax liability – Income Tax, CGT, IHT or Stamp Duty Land Tax) had to register on the TRS and provide certain information in relation to their settlors, beneficiaries, power holders and assets.

However, the scope of registrable trusts was materially expanded to comply with the 5th Money Laundering Directive.

Specifically, all express trusts now need to register with TRS even if they do not incur a UK tax liability.

Express trusts are usually created by a written deed or declaration. Trust-based IHT-planning solutions that most advisers are familiar with – such as Discounted Gift Trusts, Gift trusts and Gift and Loan arrangements – are all ‘express trusts’. In most cases, the underlying investment for these solutions is an investment bond where tax liabilities are usually deferred until death or final surrender.

Previously, such trusts would not have needed to be registered unless and until either an IHT charge was due (such as a periodic / exit charge) or a chargeable event occurred and the trustees (not the settlor) became liable to income tax. However, the new rules mean that such trusts must now be registered even where they are not incurring any tax liabilities.

Trustees must:

  • Register non-taxable trusts in existence on or after 6 October 2020 by the 1 September 2022 or within 90 days, whichever is the later.
  • Register non-taxable trusts created after 1 September 2022 within 90 days.
  • Update the register with changes to the trust details and/or circumstances, within 90 days of the change.

Different reporting deadlines apply to registrable taxable trusts. Where there are several trustees, they are all equally responsible for managing the trust and registering it with the TRS. That said, a ‘lead trustee’ will need to be nominated. This individual will become the main / first point of contact with HMRC.

What information do the TRS require?

Information required by the TRS include the following:

  • The name, type of trust and creation date will all need to be recorded, as will details of the settlor including the settlor’s name, date of birth, nationality, and residency status.
  • Details of the trustees and beneficiaries will also be recorded. Where the beneficiaries are un-named, such as with a Discretionary Trust, the class of beneficiaries need to be noted. A trustee need only report on the specific identity of a beneficiary once they receive a benefit from the trust. Beneficiary disclosures include names, date of birth, country of residence and nationality.
  • It will be necessary to record the names, dates of birth and NI numbers of all individual trustees together with their nationality and residency status. Passport details and addresses should be used for non-UK citizen trustees.
  • Where a professional / corporate trustee had been appointed, disclosures should include the name of the firm, their address, contact details and UTR details, if they are UK based.
  • For trusts containing taxable assets, there is an additional requirement to register details of any assets of the trust including a valuation at the settlement date. The information required is likely to include a description of the asset such as address of property or land and / or number of shares in a company / units in a collective etc.

This Link on Gov.uk provides further guidance on registering a trust.

What happens to non-compliant trustees who fail or are late in registering their trust information?

On 5 March 2018, HMRC provided details of the penalty regime for late registration with the TRS. The fixed penalties for an administrative offence are:

  • Registration made up to three months after the due date: £100 penalty
  • Registration made three to six months after the due date: £200 penalty
  • Registration more than six months late: either 5% of the total tax liability or £300 penalty, whichever is the greater sum.

HMRC have indicated that penalties for late TRS returns will not be issued automatically, Instead, they will take a “pragmatic and risk-based approach to charging penalties”.

Are there any trusts exempt from registering with the TRS?

Certain trusts will not need to register with the TRS unless they incur a UK tax liability. These include:

  • Trusts holding assets of a UK registered pension scheme — such as occupational schemes
  • Trusts holding life or retirement policies providing that the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the life assured (note that HMRC have recently confirmed that protection policies that acquire a surrender value will remain within this exemption unless and until the plan is surrendered. This exemption does not however extend to life-insurance based investment bonds)
  • Trusts holding insurance policy benefits received after the death of the person assured provided the benefits are paid out from the trust within 2 years of the death
  • Charitable trusts
  • Pilot trusts set up before 6 October 2020 holding less than £100 — pilot trusts set up after 6 October 2020 will need to register regardless of their value
  • Co-ownership trusts set up to hold shares of property or other assets which are jointly owned by 2 or more people for themselves as ‘tenants in common’
  • Will trusts are excluded from registration for two years from date of death. If the will trust is still in existence after that point or if further property is added from outside the estate, the trust will need to register from that date
  • Trusts for bereaved children under 18, or adults aged 18 to 25, set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Compensation Scheme
  • ‘Financial’ or ‘commercial’ trusts created in the course of professional services or business transactions for holding client money or other assets

Risk Disclaimer

This content is directed only to persons having professional experience in matters relating to personal investment (investment professionals) and should not be distributed to anybody else. It has been prepared for general information purposes only. It does not constitute advice (whether investment, legal, regulatory, tax or otherwise) provided by BMO Global Asset Management (EMEA) (BMO). Certain content in this document is based on our own reading of legislation, regulation, or guidance issued by a government or regulatory authority, as at the date of publication, which is subject to ongoing change. Tax treatment is based upon individual circumstances. BMO gives no warranty or representation, whether express or implied, that such content is up to date, complete, or accurate.

Investment professionals in receipt of this document should not rely on any of its content. They remain solely responsible for advising their underlying clients in accordance with their own legal and/or regulatory obligations and for taking their own independent advice as they determine is necessary.

To the extent lawful, BMO excludes all responsibility and associated liability for any loss or damage suffered by any recipient of this document who chooses to rely on its content, whether occurring in contract, tort (including negligence), breach of statutory duty, or otherwise, even if foreseeable.

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