With this deadline approaching, the Lodders TRS specialists answer some frequently asked questions to help you understand the registration process and your obligations as a trustee. You can also find more information in this article here.
The TRS is an online system by which trustees (administrators of the trust) can register the trust that they are responsible for with HMRC. It was introduced to satisfy the requirements of The Fourth and The Fifth Money Laundering Directives (4MLD and 5MLD). The 4MLD and 5MLD were introduced by the EU to prevent trusts being used for money laundering and/or terrorist financing.
For further information, please see the Trust Registration Service Manual.
The deadline and timescales for the registration of existing or new trusts are as follows:
There is a legal obligation for trustees to register the trust, but some trusts are exempted. HMRC will enforce penalties if you do not register your trust, or you don’t keep the details on the register up to date.
We have created this simple flowchart to follow to work out if you need to register your trust with the TRS.
An express trust is a trust that was deliberately created by a settlor who expressly transfers property to a trustee, who takes that property into their own name but holds it for the benefit of the beneficiary. This can be by Will, to take effect on their death, or by Settlement Deed in their lifetime.
There is a legal obligation for trustees to register the trust, but some trusts are exempted from doing so. If you do not register your trust or keep the details on the register up to date, HMRC enforces penalties.
Your obligations as a trustee are to register your trust by the applicable deadline. To register your trust and for further information, see the guidance for registering a trust as a trustee.
You must also keep the details of the trust updated, and you have 90 days in which to do so.
Lodders can register your trust for you as an Authorised Agent. If you would like us to register your trust for you, please contact us here.
It is the lead trustee’s responsibility or their agent if they have appointed one. The trustee must have an organisational government gateway account.
When a trust has multiple trustees then the trustees can nominate one of the trustees to act as the lead trustee to register the trust. The lead trustee is then responsible for the administrative duties in relation to the tax affairs of the trust and is the main contact point that HMRC will use.
HMRC will initially issue a “nudge” letter and fixed penalties of £100. HMRC will enforce more stringent penalties if trustees deliberately ignore the registration requirements.
If all trustees are unable to access the internet, you can call HMRC’s helpline on 0300 123 1072 for assistance or to appoint an agent if you are unable to do so digitally.
It is the trustees’ responsibility to register the trust and keep it up to date. They can appoint an agent to do this on their behalf but there will be a cost to this. If the trust does not hold cash to pay for this, the trustee or beneficiary can lend money to the trust.
The list of exempt trusts can be found on the HMRC TRS Manual here.
Trustees are required to enter details about the lead-trustee, co-trustees, settlor, and beneficiaries.
A complete list of what information is needed is available here.
A legal owner is the official legal owner of the property. A beneficial owner is the person who has a right to use or enjoy the property.
For example, Mary is the legal owner of the farmland and owns the title for the property and her name is on the Land Registry. Mary has made a Declaration of Trust stating that Steve can use her farmland to conduct his farming business. Steve is the beneficial owner of the farmland as he is entitled to enjoy or use the farmland.
HMRC wants to have an accurate picture of who can benefit from a trust. Where a beneficiary is named on a trust instrument, separate from members of a named class, then they can clearly be determined and trustees must provide the relevant information. Where a beneficiary is un-named, being only part of a class of persons, a trustee will only need to disclose the identities of the beneficiary when they receive a financial or non-financial benefit from the trust.
You must update the register if the trust becomes liable to Income Tax trust or Capital Gains Tax or if there are any changes to trustees’, beneficiaries’ or settlors’ details. Changes must be recorded on TRS within 90 days of the change to avoid fines and penalties.
Offshore trusts must be registered with the TRS if they have at least one UK resident trustee. This also applies to non-UK registered trusts that acquire land or property in the UK. Trusts that are already registered in another EU Member State will be automatically exempt from UK registration.
Estates where the administration has continued for more than two years, and complex estates need to register on the TRS. A complex estate is an estate that does not meet the conditions for using the informal payment procedures, please see here. In estates where there are underlying trusts, the dates for registration vary and we suggest you take legal advice.
Details of the register will only be released in certain circumstances to those with a ‘legitimate interest’ such as law enforcement agencies where there is evidence of money laundering or terrorist financing activity. Beneficiary information will not be disclosed if there is a risk of fraud, kidnapping, blackmail, extortion, harassment, violence, or intimidation, or where a beneficiary is a minor, or otherwise legally incapable.
Third parties are required to have formal confirmation that the trust is registered and up to date on TRS before they can act for you. For example, if you wish to sell a trust property the estate agent and conveyancer will need to see evidence in the form of a certificate downloaded from the register.
Our fees at Lodders for registering a trust with the Trust Registration Service are £350 + VAT for existing clients, and £600 + VAT for new clients.
For help with a legal problem or more information on any of our services at Lodders, please get in touch with our friendly team. You can contact us via the number or email address below, or fill in the form and we will get back to you as quickly as we can.
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